TEXT-S&P revises Cardtronics notes recovery rating to '3'

Wed Jul 25, 2012 12:28pm EDT

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.) 

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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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