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Credit problems for the company that vetted Edward Snowden

It has been a disastrous 18 months for Altegrity, the Virginia-based data management and employee screening company responsible for vetting former spy agency contractor Edward Snowden. And the future isn’t looking much better, based on a credit downgrade today from Moody’s Investors Service.

Private equity firm Providence Equity Partners bought Altegrity, and later beefed up the platform by purchasing Kroll for $1.13 billion. By early last year, however, the company was struggling under a massive debt load and was struggling to find a buyer for its private sector background check subsidiary HireRight. Then came the Snowden leaks, and word that Altegirty had botched its investigation. The U.S. Justice Department later charged an Altegrity business with fraud, arguing that it had failed to follow proper procedure in more than 600,000 cases. And then there was a data breach.

Not surprisingly, the U.S. Office of Personnel Management canceled its contract with the business unit responsible for the public-sector background checks.

All of these developments led to today’s credit downgrade, with Moody’s raising Altegrity’s likelihood of defaulting on its bonds and downgrading its credit ratings from stable to negative. In its explanation, Moody’s cited the OPM contract loss:

Moody’s believes that the loss of earnings will strain Altegrity’s already weak liquidity and that the company does not have sufficient liquidity to fund debt service costs and maturities in its fiscal year 2016. The company will likely incur transition costs and restructuring in the near term as a result of OPM’s decision, and its diminished scale will erode EBITDA margins. Moody’s now expects the company’s free cash flow deficits over the next 12 to 24 months to increase relative to its previous expectations.

Altegrity currently has around $1.7 billion of debt on its balance sheet, much of which was extended out earlier this year to 2019 and beyond (around $22 million is due in November 2015). Fortune has reached out to the company and Providence Equity Partners, and will update this post if they choose to comment.