S&P cuts Affiliated Computer

Standard & Poor's said it lowered its corporate credit and senior unsecured debt ratings on Affiliated Computer Services Inc. (ACS) to BB+ from BBB+ and placed it on CreditWatch with negative implications.

The agency said the rating actions follow ACS's announcement that its board has authorized a modified Dutch auction tender offer to purchase up to 55.5 million shares of its Class A common stock.

S&P said the downgrades reflect its assessment that ACS no longer possesses an investment-grade financial policy in light of the announced $3.5 billion debt-financed Dutch tender offer.

Pro forma total debt to EBITDA will rise to about the 5 times range from under 1 times currently, the agency added.

Ratings support is provided by ACS growing, annuity-like revenue streams, solid historic profitability and stable cash flow generation, S&P said.

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