S&P lowers Cardtronics notes recovery to 3

Standard & Poor's said it revised the recovery rating on the Cardtronics Inc.'s $200 million 8¼% senior subordinated notes due 2018 to 3 from 4, based on an increase to the default-level enterprise valuation on the company.

The higher valuation reflects the successful integration of recent acquisitions, the corresponding larger scale from these acquisitions as well as organic growth and the maintenance of improved profitability, S&P said.

The BB rating on the notes is unchanged.

While the increased valuation has resulted in an estimated numerical recovery in the 70% to 90% range for the subordinated notes, the agency said it capped the recovery rating at 3, which indicates 50% to 70% expected recovery due to a policy of limiting the recovery on unsecured debt at 3 for issuers in the BB category.

The BB corporate credit rating and stable outlook on Cardtronics remain unchanged and reflect its fair business risk profile and significant financial risk profile, S&P said.

The business risk assessment incorporates the company's sustained improvement in EBITDA margins and return on capital over the past three years, the agency said, along with its clear leadership position in its niche product market.

These positive attributes are offset by its relatively limited scale, limited product and geographic diversity, material customer concentration and strong competition from electronic payment technologies, S&P said.

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