S&P downgrades Exela

S&P said it lowered the issuer credit rating on Exela Technologies Inc. to B- from B, along with the rating on the company's senior secured credit facility to B- from B.

The 3 recovery rating is unchanged, indicating 50% to 70% expected default recovery.

Exela's operating performance has been worse than expected because of its prolonged optimization and restructuring expenses and higher-than-anticipated working capital needs as it ramps up new contracts, S&P explained.

This has resulted in negative free operating cash flow of $50 million in the first quarter of 2019, the agency said.

The negative outlook reflects the potential for downgrades over the next six to 12 months if continued weak operating performance causes the company's liquidity to deteriorate and if large cash flow deficits persist, S&P said.

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