S&P: Harland Clarke on watch

S&P said it placed the B+ corporate credit rating on Harland Clarke Holdings Corp. on CreditWatch with negative implications.

The CreditWatch placement follows news that Harland Clarke intends to acquire RetailMeNot Inc. for $630 million, S&P said.

Although the acquisition will improve Harland Clarke's scale and diversification, operating leverage with Valassis' shared mail business and online media customer base, the additional debt could result in higher sustained adjusted leverage, the agency said.

As a result, S&P said it would consider lowering the corporate credit rating one notch to B if Harland's adjusted debt-to-EBITDA rises and remains higher than 5x.

The CreditWatch resolution will partly depend on a view of the business benefits of the new acquisition and the risk to Harland Clarke's leverage, the agency said.

The company's long-term financial policy, including the potential for debt-financed acquisitions or shareholder returns, also will be considered, S&P said.

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