TEXT-S&P revises Cardtronics notes recovery rating to '3'
July 25 - Standard & Poor's Ratings Services said today that it revised the recovery rating on the Cardtronics Inc.'s $200 million 8.25% senior subordinated notes due 2018 to '3' from '4', based on an increase to our default-level enterprise valuation on the company. The higher valuation reflects the successful integration of recent acquisitions, the corresponding larger scale from these acquisitions as well as organic growth, and the maintenance of improved profitability. The 'BB' issue-level rating on the notes is unchanged. While our increased valuation has resulted in an estimated numerical recovery in the 70% to 90% range for the subordinated notes, we have capped the recovery rating at '3' (50% to 70% expected recovery) due to our policy of limiting the recovery on unsecured debt at '3' for issuers in the 'BB' category. (See the criteria research report "Criteria Guidelines For Recovery ratings On Global Industrials Issuers' Speculative-Grade Debt," published on Aug. 10, 2009, on Ratings Direct for our criteria and rationale pertaining to the capping of recovery ratings for 'BB' issuers. The relevant information is contained in a footnote to the 'Recovery Rating Scale And Issue Rating Criteria' table.) The 'BB' corporate credit rating and stable outlook on Cardtronics remain unchanged and reflect its "fair" business risk profile and "significant" financial risk profile. The business risk assessment incorporates the company's sustained improvement in EBITDA margins and return on capital over the past three years, and its clear leadership position in its niche product market, but these positive attributes are offset by its relatively limited scale, limited product and geographic diversity, material customer concentration (7-Eleven), and strong competition from electronic payment technologies. The financial risk profile reflects leverage and other credit metrics currently somewhat better than a significant financial profile, but also its acquisitive track record. In addition, cash flow levels are modest on an absolute basis and provide only moderate financial flexibility within the rating. (For the complete corporate credit rating rationale and recovery analysis, please see the summary analysis and recovery report, respectively, on Cardtronics, which will be published shortly following the release of this article.) RELATED CRITERIA AND RESEARCH -- U.S. Telecom And Cable Companies' Maturities Are Manageable, But Lower-Rated Issuers Face Some Liquidity Challenges, July 23, 2012 -- U.S. Telecom And Cable Companies, Strongest To Weakest, July 13, 2012 -- U.S. Telecom And Cable Ratings Should Be Stable Overall During Weak Economic Recovery, July 13, 2012 -- A Matter of Policy: U.S. Telecom Companies Maintain High Dividend Payouts, But For How Long?, May 30, 2012 -- A Matter of Policy: U.S. Cable And Satellite-TV Companies Ratchet Up Shareholder Payouts, May 16, 2012 -- Top 10 Investor Questions: U.S. Telecom and Cable Industries, May 10, 2012 -- Assessing The Four-Notch Rating Gap Between The Two U.S. Direct-To-Home Satellite Video Operators, May 9, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 RATINGS LIST Cardtronics Inc. Corporate Credit Rating BB/Stable/-- Recovery Rating Revised To From Cardtronics Inc. Senior Subordinated BB BB Recovery Rating 3 4 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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