S&P puts Extreme Reach on negative watch

S&P said it placed all of Extreme Reach Inc.'s ratings, including its B- issuer credit rating, on CreditWatch with negative implications.

The CreditWatch placement reflects an expectation that without a covenant amendment, Extreme Reach will likely breach its covenant at the end of first quarter 2019 when the covenant steps down to 3.75x, the agency explained.

The negative watch also reflects that the revolving credit facility will mature Feb. 7, which further weakens the company's liquidity position, S&P said.

The agency said it does not expect the company to require its revolver to meet its fixed charges.

The company's cash flow generation over the next 12 months is sufficient to cover its fixed charges, S&P said.

But, the lack of a revolving facility weakens the assessment of the company's liquidity, including its ability to withstand a weaker-than-expected operating performance if the TV segment declines accelerate or if its planned enterprise model strategy fails to improve its leverage and cash flow metrics, the agency said.

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