Standard & Poor’s dropped the rating of Hanley Wood’s $423.4 million in debt from "CCC" to "CCC-," citing concerns over the b-to-b publisher’s performance and ability to meet covenants in the near future. S&P says it’s concerned that Hanley Wood will be "unable to meet financial covenant step-downs in early 2012 without an amendment, a refinancing or repayment of the revolving credit facility, or an equity cure from sponsors."

"We expect covenant step-downs and continued weakness in the U.S. real estate market could cause Hanley Wood’s cushion of compliance with covenants and liquidity to erode further in 2011," S&P said in a report on April 28. S&P also dropped Hanley Wood’s corporate credit rating from CCC+ to CCC and the rating outlook to negative.

Residential construction giant Hanley Wood has long been considered one of the best-run companies in b-to-b media but has also been dogged by speculation over its performance amid the housing and construction market crash. Overall revenue for Hanley Wood dropped 9 percent while EBITDA fell 35 percent in 2010, according to S&P. Exhibition revenue sank 21 percent while publishing revenue actually started to recover in the second half, finishing with a 1 percent decrease for the year. Hanley Wood president Peter Goldstone was let go last November as part of a senior management restructuring (in February, Goldstone was named president of Government Executive Media). Hanley Wood, which was acquired in 2005 by J.P. Morgan for $650 million, publishes more than 30 magazines and Web sites, 35 conferences and nearly 20 trade shows.

"This downgrade has no impact on our business," Hanley Wood CEO Frank Anton told FOLIO:. "We will continue to operate in a business-as-usual manner, which at Hanley Wood means doing what’s best for our audience and our customers." 

Restructuring and bankruptcy have defined b-to-b publishing for the last three years as overleveraged publishers were unable to meet covenants. Network Communications Inc. and Advanstar reached agreements with lenders to significantly slash debt while Questex Media, Ziff Davis, Cygnus Business Media and Summit Business Media were among the companies that filed pre-packaged bankruptcies. Consumer publishers weren’t immune–AMI, Reader’s Digest and regional publisher Morris Publishing Group filed pre-packaged bankruptcies as well.