Standard & Poor?s? Rating Services assigned a preliminary ?B-? rating to a planned $500 million debt offering by Ceridian Corp.?
In addition to the speculative grade rating, S&P assigned a recovery rating of ?3,? indicating the expectation of meaningful recovery in the event of a payment default, a statement from the ratings agency said. The outlook is stable.
Ceridian, a Minneapolis-based information services provider with a major operations center in St. Petersburg, is issuing the notes in conjunction with an amend-or-extend transaction of part of the company?s currently outstanding bank debt, S&P said.
Ceridian, which serves the human resources, stored value cards and transportation industries, has seen revenue and earnings growth constrained by global economic weakness and persistently high unemployment that limits payroll processing revenue growth. The company?s recent acquisition of Dayforce, which will enable it to offer software-as-a-service products, should help offset some of the economic impacts as it gains new customers, S&P said.
Ceridian?s loss of a contract for Military OneSource, which had been serviced primarily from the St. Petersburg location, impacted adjusted earnings margins, which were 24 percent before interest, taxes, amortization and depreciation in 2011. The company is focused on improving profitability through tighter cost controls and business process improvements, S&P said.
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