Reuters
S&P affirms Global Imaging Systems
Wednesday May 14, 3:51 pm ET
(The following statement was released by the rating agency)
NEW YORK, May 14 - Standard & Poor's Ratings Services said today that assigned its 'B' rating to Global Imaging Systems Inc.'s (NasdaqNM:GISX - News) proposed $50 million subordinated notes due 2008 and assigned its 'BB-' to the proposed $100 million secured five-year revolving credit facility and to the $150 million secured six-year term loan facility.
At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on Global Imaging Systems. The outlook is stable.
Tampa, Fla.-based Global Imaging is a distributor of automated office equipment solutions, network integration solutions, and electronic presentation systems to the U.S. middle market. The company reported long term debt outstanding of $194 million as of March 31, 2003.
The proposed debt issue is part of a recently announced refinancing plan; the current rating and outlook incorporate the expectation that leverage will not materially increase after the refinancing is completed. The company is expected to use its decentralized business model to modestly expand its geographic and customer base through acquisitions. Acquisitions are expected to continue to be funded largely with debt.
The revolving credit and the term loan are rated 'BB-', the same as the corporate credit rating. The facilities are equally and ratably secured by a first-priority perfected interest in all tangible and intangible assets of the borrowers, as well as a pledge of 100% of the capital stock of each subsidiary that is a borrower.
"We view the $250 million credit agreement as having a likelihood of marginal recovery of principal in the event of default or bankruptcy," said Standard & Poor's credit analyst Martha Toll-Reed.
Elements of a default scenario could include a material decline in profitability or cash flow. Standard & Poor's expects lenders could recover less than 50% of principal, as the value of the collateral could be substantially less than the outstanding principal amount of the credit facility under a distressed or bankruptcy scenario. The factors most likely to cause a decline in collateral and asset values are restructuring charges or asset writedowns.
Covenants in the credit agreement include limitations on: additional debt, liens, investments, capital expenditures and asset sales. In addition, Global must maintain minimum fixed-charge coverage ratios and maximum levels of leverage. The refinancing is not expected to result in any material changes in collateral or covenants.
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.
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