Financial credit rating agency Standard & Poor’s has revised Cygnus Business Media’s credit rating outlook from stable to negative because of concerns over Cygnus’ significant debt due in 2009.

According to S&P, the new rating—a "CCC+"—reflects several financial factors, including Cygnus’ limited liquidity, high debt leverage, small EBITDA base and what it calls “difficult business fundamentals.” In a release, S&P called Cygnus’ margin of compliance with covenants “very thin,” and said they will be a significant hurdle for the company moving forward.

For the first quarter, Cygnus’ revenues were down 1.5 percent while EBITDA was flat, S&P said, although it didn’t offer specific figures. After adjusting for closed publications and timing shifts, revenue was up 3.4 percent and EBITDA was up 5 percent.

A S&P analyst was not immediately available for comment.

A key challenge for Cygnus, according to S&P, will be refinancing its $157 million in debt that’s due next year, including its senior secured term loan that matures July 13, 2009.

"The main reason for the outlook change is that the majority of the company's debt is maturing next year," a Cygnus spokesperson wrote in an e-mail to FOLIO:. "Adjusting the outlook is commonly done by the rating agencies until they get a clear view of what a company will do with the maturing debt. Obviously, we are aware of it. At the appropriate time the company will evaluate its options and we are confident in a successful outcome."

The revised credit rating comes as the ABRY-owned b-to-b publisher is exploring a possible sale [0]. Cygnus co-CEOs Carr Davis and Tony O’Brien said in an interview with FOLIO: last week that Cygnus has been approached with inquiries, and carefully described the potential divestment as “a process.”

During the interview, Davis said Cygnus increased e-media revenue by 60 percent from 2006 to 2007, and from 4.5 percent of total revenue in 2006 to 10 percent of total revenue in 2007.

Cygnus went on the block in 2006 but subsequently pulled off the market that year.

Earlier this year, S&P revised its outlook [0] of Hanley Wood from stable to negative, citing the soft housing market and “weaker than expected” 2007 operating results.