S&P lowers KSS to negative

S&P said it revised the outlook on KSS Holdings Inc., the parent of Key Safety Systems Inc., to negative from stable.

The agency also said it affirmed the company’s B+ corporate credit rating.

S&P also said it affirmed the B+ rating on Key Safety's senior secured debt.

The 3 recovery rating on the term loan is unchanged, indicating 50% to 70% expected default recovery.

The outlook revision reflects a belief that KSS's significant capital expenditure requirements will likely limit its free operating cash flow prospects over the next 12 months, the agency said.

The recent operational inefficiencies that the company has experienced related to capacity constraints – and supply chain and quality disruption issues – will likely pressure its EBITDA margins in early 2017, S&P said.

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