New York—Standard & Poor’s Ratings Services has placed several ratings on Cygnus Business Media on CreditWatch, with negative implications.
These include Cygnus’ ‘CCC+’ corporate credit rating, ‘CCC+’ first-lien bank loan rating and ‘CCC-’ second-lien bank loan rating. The negative CreditWatch listing reflects Cygnus’ “thin cushion of compliance” with its bank covenants and its near-term debt maturity at the holding company level, S&P said.
“Cygnus’ financial risk is very high, because operating company borrowings to make holding company debt repayments are jeopardizing operating company covenant compliance,” said S&P credit analyst Tulip Lim in a news release.
Paul Mackler, President-CEO of Cygnus Business Media, took the news in stride. “It is appropriate and not at all unusual for Standard & Poor's Ratings Services to take a cautious and conservative position with highly leveraged companies,” he said. “S&P has not changed its rating on Cygnus. They are simply noting for our lenders what our lenders already know.”
Mackler added: “The Company met all its bank covenant obligations this year and has always met its financial obligations, which is one of the reasons GE Commercial Finance led a very successful and favorable refinancing of the company just last year.”
S&P said Cygnus has “nominal cash balances” and $15.4 million in holding company debt maturing in January 2006.