S&P cuts Renaissance Learning, rates loans B-, CCC

Standard & Poor's said it downgraded Renaissance Learning Inc. to B- from B. The outlook is stable.

S&P also assigned a B- issue-level rating to the company's $515 million senior secured credit facilities, which consist of a $40 million revolving credit facility due 2019 and a $475 million first-lien term loan facility due 2021. The recovery rating on this debt is 3 and indicates an expectation of meaningful (50% to 70%) recovery in the event of payment default.

Additionally, S&P assigned a CCC issue-level rating to the company's $230 million senior secured second-lien term loan facility due 2022. The recovery rating on the debt is 6 and indicates an expectation of negligible (0% to 10%) recovery in the event of a payment default.

"The ratings on Renaissance Learning Inc. reflect its aggressive financial policy, evidenced by its increased debt leverage to about 10x at transaction close, up from the high-6x at Dec. 31, 2013, a modest position in a highly fragmented and niche overall instruction materials market, and federal and state government budget headwinds," said S&P credit analyst David Tsui in a news release.

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