S&P gives Quorum loans B

Standard & Poor's said it assigned a B corporate credit rating to QBS Intermediate Holding Co. II LLC (d/b/a Quorum Business Solutions).

The outlook is stable.

In addition, the agency assigned a B issue-level rating and 3 recovery rating to the company's $15 million revolving credit facility due 2019 and $125 million first-lien term loan due 2021. The 3 recovery rating indicates an expectation for meaningful (50% to 70%) recovery of principal in the event of payment default.

"The ratings on Quorum reflect the company's 'weak' business risk profile and its 'highly leveraged' financial risk profile (as defined by our criteria)," S&P credit analyst Peter Bourdon said in a news release.

According to the agency, Quorum’s weak business risk profile incorporates its small revenue base and limited geographic diversity and operating scale. Furthermore, the company competes with several major and long-established players that have greater financial and product resources.

However, S&P said, its growing and significant recurring revenue base and high customer retention rate partly offset this weakness.

Quorum's "highly leveraged" financial profile reflects pro forma leverage of over 5 times and the agency’s expectations that leverage will be around 5 times for the intermediate-term.

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