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S&P affirms Interstate Hotels, outlook developing
Standard & Poor's said it affirmed its ratings on Interstate Hotels & Resorts Inc., including the CCC+ corporate credit rating.
At the same time, the agency said it revised its outlook on Interstate to developing from negative.
"The ratings affirmation reflects Interstate's improved liquidity profile resulting from a number of provisions in the merger agreement announced on Friday," said credit analyst Liz Fairbanks.
"These positive actions alleviate our near-term liquidity concerns, including the need to meet scheduled amortization payments on the term loan and remain in compliance with financial maintenance covenants. We remain concerned, however, about the operating environment for the lodging industry in the coming quarters, Interstate's weak credit measures and the company's ability to refinance its credit facility due in 2012."
The developing outlook reflects uncertainty around the new owners' willingness and ability to reduce leverage at the company, potentially through additional cash equity injections applied to debt reduction, the agency said.
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