Standard & Poor's Ratings Services said it lowered its long-term rating to BB-plus from BBB-minus on Crossroads Charter Academy, Mich.'s series 2012 public school academy revenue bonds and series 2007 revenue bonds.
The outlook is stable.
"The rating reflects our view of the academy's negative operating margin in fiscal 2013 and a declining trend during the past three years," said Standard & Poor's credit analyst Kenneth Gacka. "The lower rating also reflects our opinion that the school's maximum annual debt service coverage generated in fiscal 2013 is inadequate at less than 1x and will likely be strained again in fiscal 2014 based on the fiscal 2014 budget, which calls for the use of reserves to balance operations," continued Gacka.
As of the close of fiscal year 2013, the school had $7.4 million of long-term debt outstanding.
