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TEXT-S&P rates Harland Clarke Holdings notes
May 11, 2012 / 8:43 PM / in 6 years

TEXT-S&P rates Harland Clarke Holdings notes

May 11 - Standard & Poor’s Ratings Services said today that it assigned issue-level and recovery ratings to Harland Clarke Holdings Corp.’s proposed $295 million senior secured notes due 2019. We assigned the debt an issue-level rating of ‘B+’ (the same as the corporate credit rating on Harland Clarke) and a recovery rating of ‘3’, indicating our expectation of meaningful (50%-70%) recovery in the event of a payment default. The company intends to use the proceeds of the new notes, net of fees and expenses, to repay a portion of the extended term loan due 2017. (For the complete recovery analysis, see Standard & Poor’s recovery report on Harland Clarke, to be published following this report on RatingsDirect.) The ‘B+’ corporate credit rating on Harland Clarke and the stable rating outlook remain unchanged. The ‘B+’ rating reflects our expectation that leverage will not meaningfully increase but will remain high, that check printing will remain in long-term decline, and that the financial policy of the company’s parent, private-equity investor M&F Worldwide Corp. (MFW), will remain aggressive. The financial policy of the company and its parent and the company’s high leverage are the principal reasons we consider HCHC’s financial risk profile “aggressive” (based on our criteria). The company’s exposure to a secular shift from printed check usage to alternative forms of payment underpins our assessment of the business risk profile as “weak” (based on our criteria). We believe these dynamics will result in the company’s organic revenue declining at a low-single-digit percent pace. (For the complete corporate credit rating rationale, see Standard & Poor’s research update on Harland Clarke, published on May 1, 2012.) RELATED CRITERIA AND RESEARCH

-- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011

-- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009

-- Business Risk/Financial Risk Matrix Expanded, May 27, 2009

-- Standard & Poor’s Revises Its Approach To Rating Speculative-Grade Credits, May 13, 2008

-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 RATINGS LIST Harland Clarke Holdings Corp. Corporate credit rating B+/Stable/-- Rating Assigned Harland Clarke Holdings Corp. $295 mil senior secured notes due 2019 B+

Recovery rating 3

0 : 0
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