S&P downgrades Coinmach

Standard & Poor's said it lowered Coinmach Service Corp.'s corporate credit rating to CCC+ from B-, its senior secured debt to B- with an unchanged recovery rating of 2 from B and its unsecured debt to CCC- with an unchanged recovery rating of 6 from CCC.

The outlook is developing.

The agency said the downgrade reflects its concerns about the potential for a near-term covenant breach and the company's continued negative free cash flow generation while incurring additional cash interest expense after the conversion of its subordinated notes to cash pay.

The ratings on Coinmach reflect its very highly leveraged financial profile and near-term potential for declining liquidity due to tightening financial covenants and negative free cash flows, S&P said.

The developing outlook reflects S&P's concerns about the company's constrained liquidity position while recognizing the possibility that Coinmach may restore sufficient covenant cushion and improve its free cash flows.

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