Premiere Global Services Downgraded To 'CCC-' On Accelerated Revenue Declines, Outlook Negative; Debt Rating Lowered

  • U.S.-based global audio conferencing service provider Premiere Global Services Inc.'s (PGi) operating and financial performance continue to deteriorate, increasing the likelihood that the company will default or undertake a distressed exchange in the coming months absent unanticipated significantly favorable changes in its circumstances.
  • We are lowering our issuer credit rating on PGi to 'CCC-' from 'CCC+'.
  • At the same time, we are lowering our issue-level rating on PGi's first-lien debt to 'CCC-' from 'B-' and revising our recovery rating on the debt to '3' from '2' based on our expectation for more claims outstanding at default.
  • The negative outlook reflects the potential that we could lower our rating on PGi to 'CC' upon its announcement of a default or distressed exchange.
NEW YORK (S&P Global Ratings) Dec. 28, 2018—S&P Global Ratings today took the 
rating actions listed above.  The downgrade reflects steep declines in PGi's 
automated conferencing business, which--combined with a deterioration in the 
company's liquidity profile--has made a default or distressed exchange or 
redemption appear almost inevitable in the first half of 2019 absent external 
liquidity support. While we recognize the company received some support from 
its private-equity sponsor in 2018 ($25 million in the third quarter and $5 
million in the fourth quarter), we believe there is a decreased likelihood 
that PGi will receive additional cash infusions from its sponsor in 2019 given 
the accelerated declines in its operating performance.

The negative outlook on PGi reflects the likelihood that a default or 
distressed exchange or redemption appears to be inevitable in the first half 
of 2019 absent an unanticipated significantly favorable change in the 
company's circumstances.

We could lower our rating on PGi to 'CC' if we expect a default to be a 
virtual certainty, which would likely occur if management announced a missed 
interest payment or distressed exchange.

Although unlikely, we could raise our rating on PGi if the company is able to 
improve its liquidity position such that it no longer faces a near-term cash 
default or covenant breach, which would most likely occur following asset 
sales and a material deceleration in its automated conferencing revenue 
declines.
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