Moody’s cuts First Advantage, facilities

Moody's Investors Service said it downgraded STG-Fairway Acquisitions, Inc.'s (First Advantage) corporate family rating to Caa2 from B3 and its probability of default rating to Caa2-PD from B3-PD.

Concurrently, the agency downgraded the ratings on the company's first- and second-lien credit facilities to Caa1 from B2 and to Caa3 from Caa2, respectively.

The outlook remains stable.

Moody’s said the downgrade to Caa2 reflects First Advantage’s weaker-than-expected sales performance and earnings erosion on top of its already-weak credit metrics and the risk that the company may not be able to improve its profitability and free cash flow meaningfully over the next 12 to 18 months.

The downgrade also reflects the uncertainty surrounding the company's ability to stabilize its business and restore liquidity to levels appropriate for operations for a company of its size, the agency explained.

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