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Koosharem Corp., which does business as Select Staffing, had its corporate credit rating lowered to a “CC” rating from a “CCC-“ rating by Standard & Poor’s Ratings Services on Oct. 21 with a judgment against the company this summer cited as one reason for the downgrade. However, the ratings firm withdrew all ratings on Koosharem on Oct. 27 at the request of Koosharem.
Standard & Poor’s ratings run from “AAA,” the highest rating, to a “D” rating, the lowest.
The ratings firm reported that factors in its decision to lower the rating included: the judgment against the company in favor of the California State Fund and an opinion by the company’s auditor, PricewaterhouseCoopers LLP, raising doubt about the firm’s ability to continue as a going concern.
While the company is negotiating a settlement with the California State Fund, the firm does not appear to have sufficient liquidity to make the payment and still fund operations, according to Standard & Poor’s.
The ratings firm also reported that Koosharem faces pricing pressure from larger firms in the staffing industry and that having roughly 40 percent of its revenue coming from California leaves the firm vulnerable to shifts in the local economy and high workers’ comp costs.
“The withdrawal of Koosharem from the S&P rating system bears no correlation to the status of our business or our operating performance, which is better than ever,” according to a statement from Select Staffing. “As the company continues an ongoing constructive dialogue with our capital partners, it has been our collective determination that the ongoing expense of a formal rating is no longer necessary, thus we decided to terminate S&P ratings services.”