Standard & Poor’s today downgraded its ratings of Central Parking Corp. deeper into junk status, citing potential that the parking-lot operator could violate a loan covenant over the next few quarters amid a decline in its operations.
The ratings service lowered ratings on the Nashville-based company’s corporate credit to “CCC” from “B-” and retained its negative outlook. Overall, the actions S&P took applied to about $401 million of debt.
S&P analysts cited a meaningful decline in the company’s earnings before interest, taxes, depreciation and amortization in the past year from because of its smaller footprint after selling some properties and weaker demand for parking spaces in the economic downturn.
Jerry Phelan, an S&P analyst, said that the downgrade reflects concerns such as about the company generating enough cash flow to cover its debt obligations and whether it would be able to extend maturity of its commercial mortgage-backed securities debt that’s due in June.
“They made their covenants as of their most recent quarter, but the concern is that they could violate a covenant in the future,” he said.
Emanuel Eads, Central Parking’s chief executive, declined to comment on the S&P downgrade. “We’re a private company and did that for a reason — that’s because we wanted to conduct our business in a way we felt was appropriate without having to report quarterly earnings,” he said.
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