Research Update: DTI Holdco Inc. (Epiq) Downgraded To 'B-' On Weakening Liquidity, Margin Pressure; Outlook Negative

Operating performance at DTI Holdco Inc. (Epiq) has been worse than expected because of revenue declines in its high-margin eDiscovery business, ongoing acquisition and integration-related costs, and higher-than-anticipated working capital needs as it experiences high days sales outstanding. S&P Global Ratings is lowering its issuer credit rating on U.S.-based legal process outsourcing provider DTI Holdco to 'B-' from 'B'. At the same time, we are lowering our issue-level rating on the company's senior secured credit facility to 'B-' from 'B'. The '3' recovery rating remains unchanged, indicating our expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in the event of a payment default. The negative outlook reflects that we could lower our rating over the next 12 months if continued

...- Operating performance at DTI Holdco Inc. (Epiq) has been worse than expected because of revenue declines in its high-margin eDiscovery business, ongoing acquisition and integration-related costs, and higher-than-anticipated working capital needs as it experiences high days sales outstanding. - S&P Global Ratings is lowering its issuer credit rating on U.S.-based legal process outsourcing provider DTI Holdco to 'B-' from 'B'. - At the same time, we are lowering our issue-level rating on the company's senior secured credit facility to 'B-' from 'B'. The '3' recovery rating remains unchanged, indicating our expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in the event of a payment default. - The negative outlook reflects that we could lower our rating over the next 12 months if continued operating weakness causes the company's liquidity to deteriorate further....

Research Update