S&P cuts IKON, IOS to junk

Standard & Poor's said it lowered its corporate credit rating on IKON Office Solutions Inc. and its wholly owned subsidiary IOS Capital LLC to BB from BBB-.

Ratings lowered include IKON Office Solutions' corporate and senior unsecured ratings to BB from BBB- and IOS Capital LLC's corporate and senior unsecured debt ratings to BB from BBB- and subordinated debt rating to B+ from BB+.

The outlook is stable.

The ratings were removed from CreditWatch, where they had been placed on Dec. 11 following IKON's announcement that it had entered into an asset-purchase and lease-financing agreement with (unrated) GE Vendor Financial Services.

S&P said the downgrade reflects IKON's diminished earnings diversity following completion of the GE transaction and S&P's expectation of lower consolidated earnings and cash flow generation, excluding retained lease receivables and any positive impact from potential strategic investments.

S&P said the ratings reflect historical revenue and earnings declines, modest returns on capital, and S&P's expectation that earnings growth (excluding the impact of potential strategic investments) will be limited by highly competitive industry conditions. These factors are offset by IKON's good position as the leading independent office equipment distributor, and enhanced liquidity.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.