Shares of Digital Media Solutions (DMS) experienced a significant drop after S&P Global Ratings downgraded the company’s credit rating to selective default. This downgrade has had a profound impact on the stock, resulting in a 15% decrease to $3.81 during early trading. Throughout the year, the company’s shares have plummeted by a staggering 82%.
S&P’s announcement came after the market closed, revealing that DMS is likely to defer upcoming interest payments on its $50 million credit facility and $225 million term loan. This deferral is expected to be classified as a distressed exchange and will be considered tantamount to default due to the anticipated delay in cash payments.
In response to these developments, S&P has downgraded DMS’s credit rating from CCC+ to selective default. Additionally, the agency has downgraded the issue-level ratings on the company’s credit facility and term loan.
Furthermore, S&P states that the company is projected to continue facing challenges throughout the remainder of the year. These challenges stem from weak macroeconomic conditions, which have resulted in a significant decline in ad spending on DMS’s platform as well as sales through its independent insurance agents.
It remains to be seen how Digital Media Solutions will navigate these difficulties moving forward.