A second private equity firm with a stake in Village Voice Media has agreed to sell its holdings back to the media company amid claims that it facilitates sex trafficking through its Web-based ad service, Backpage.com, writes Reuters. The move by Trimaran Capital Partners to bail out of its investment comes after a Goldman Sachs [...]

As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies by Moody’s Investors Service Standard & Poor’s Ratings Services.

Company: Rafaella Apparel Group
Sponsor: Cerberus Capital Management LP
Action: S&P lowered its corporate credit rating on Rafaella to ‘CC’ from ‘CCC’ and its issue-level rating on the senior secured notes to ‘C’ from ‘CCC-’.
Highlight: The company commenced a modified Dutch auction tender offer to purchase up to 51% of its outstanding 11.25% senior secured notes due 2011.

As usual, we have a week’s worth of ratings actions (mostly downgrades) on the debt of LBO-backed companies from ratings agencies S&P and Moody’s.

This week brought some good news from the debt raters. S&P sees encouragement in the performance of Dana Holding Corp., the giant auto parts maker that Centerbridge bought out of bankruptcy. Meanwhile Moody’s feels comfortable enough about the performance of Bain Capital’s Sensata Technologies B.V. to upgrade the company’s ratings. The ratings agencies served up two more downgrades as well, for companies owned by Kohlberg & Co., Versa Capital Management, Apax Partners and Trimaran Capital Partners.

Company: Dana Holding Corp.
Sponsor: Centerbridge Capital Partners LP
Action: S&P raised its corporate credit rating on Dana to ‘B’ from ‘B-’ and raised the debt ratings. The outlook is stable.
Highlight: “Dana’s earnings and cash flow for the third quarter were better than we expected, reflecting benefits from aggressive restructuring actions after emerging from Chapter 11 in early 2008, despite weak auto sales. In addition, Dana reduced debt by $254 million in the first nine months of 2009 through a Dutch auction, market purchases of debt, and raising funds through a common equity offering. As a result, the company’s covenant cushion has improved.”

May was a big month for junk bonds: More than $15.9 billion worth of the high yield notes were issued, which was the highest monthly total since June 2008. That figure includes issuances from several buyout-backed companies, including large offerings from Harrah’s Entertainment, Apria Healthcare and Gibson Energy Holdings.

Buyouts’ Ari Nathanson wrote that the action offers a glimmer of hope that investors might be more comfortable with risk, and perhaps hungry to invest in high yield debt for new leveraged buyouts.

I’m wondering if it’s not based on risk appetite at all, but simply reflects a desire to invest in anything. Some of these issuers go beyond “risk.” Harrah’s, for example, raised $1.323 billion worth of junk bonds, an increase from the original plan to sell $1 billion. Since its debut, the company’s notes traded at a respectable 96 to 97 cents on the dollar.

Mistral Equity Partners, the new firm created by alumni of Trimaran Capital Partners, has all but closed its debut fund, peHUB has learned. The effort started out in September 2007 with an anchor commitment from Schottenstein Group and its sights on $500 million.

Since then the fundraising market has basically fallen apart and I’m sure Mistral’s focus on consumer products in a recession hasn’t helped. To date, the firm has closed on just under $300 million in funding. The fund will remain open until June 30 for any straggler investors who may come in at the last minute. Forum Capital is the fund’s placement agent.

I called Andrew Heyer, the firm’s Managing Partners, for comment. He said, “We’re very

As usual, I have a week and a day’s worth of Moody’s and S&P downgrades on PE-backed companies. This week, there were nine new ones, including two backed by Warburg Pincus and two from Bain Capital. (Apologies for the delay as I was out Friday and Monday)

Company: Rafaella Apparel Group
Sponsor: Cerberus Capital Management
Downgrade: S&P announced a corporate credit rating downgraded from ‘CCC’ from ‘B-’.The outlook is negative.
Highlights: “We estimate that leverage may increase to over the 11.5x area (assuming debt levels do not increase significantly from current levels) if revenues decline by about 13% for fiscal 2009 from fiscal 2008 levels and EBITDA margins remain in the low single digits, which may reduce Rafaella’s net income covenant cushion.”

Below, the latest round of S&P ratings headlines on a few private equity-backed portfolio companies. Listings with asterisks denote inclusion in S&P’s Weakest Links list.

December 16, 2008
Brookstone Inc. Outlook Changed To Negative; ‘B’ Corporate Credit Rating Affirmed. Brookstone is backed by J.W. Childs Associates and Temasek Holdings.

Perkins & Marie Callender’s Inc. Downgraded To ‘CCC’ On Note Payment Concerns. Perkins & Marie Callendar’s Inc. is backed by Castle Harlan. ***

Del Frisco’s Restaurant Group Outlook Changed To Negative;’B’ Corporate Credit Rating Affirmed. Del Frisco’s is backed by