S&P keeps TRM on negative watch

Standard & Poor's said its B+ corporate credit and senior secured debt ratings on TRM Corp. remain on CreditWatch with negative implications, reflecting uncertainties with respect to financing arrangements of the $78 million Travelex acquisition.

The CreditWatch review has been expanded to include the impact of recent earnings declines on expectations for future leverage and cash flow, S&P said.

TRM reported a sharp and unanticipated decline in earnings, primarily because of an unusually high level of ATM theft and vandalism in the United Kingdom, and to a lesser extent, lost revenue from certain photocopiers, S&P said.

Because of reduced profitability, the company's cash flow remains under pressure, S&P said.

While leverage has been reduced because of an equity offering, proceeds of which were applied to debt reduction, the company intends to finance its $78 million acquisition of Travelex with debt, which likely will increase leverage from the current level of 3.2x, pro forma for the equity sale, S&P said.

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