The rating on Harland Clarke Holdings Corp.'s (HCH) reflects its high debt leverage, exposure to a secular shift from print check usage to alternative forms of payment, and the aggressive financial policy of the company's parent. These factors are somewhat mitigated by the company's stable cash flow generation and increased diversification following acquisitions in recent years. In addition, the rating incorporates the credit quality of M&F Worldwide Corp. (MFW), the parent of Harland Clarke Holdings, and the expectation that MFW will continue to maintain an aggressive financial policy of debt-financed acquisitions. Following several quarters of EBITDA growth, year over year EBITDA in the third quarter of 2010 declined 11.5%, primarily due to weakness in the company's check printing segment (the
