After a rough year, 88 companies, a quarter of them from the retail sector, will look forward to a fresh start.
These PE-sponsored companies received distressed ratings. They’re defined as holding credit ratings of B- or lower with a negative outlook from S&P or a corporate-family rating of Caa1 or lower with a negative outlook from Moody’s for 2018, through Dec. 11.
Retail led all sectors with 21 companies (24 percent) to receive a distressed rating. Media and entertainment came in second with 14 companies, or 16 percent. Industrials and consumer products and services came in third with nine companies, or 10 percent.
Seven companies received additional downgrades since the last report, which was based on numbers through Oct. 16. Of those, consumer products and services had three companies and retail had two.
In retail, BevMo, which received a B- from S&P in April, was downgraded to CCC+. The TowerBrook portfolio company has underperformed and is expected to remain under pressure.
On the consumer products and services side, CTI Foods Holding fared even worse. Moody’s gave the Thomas H. Lee Partners and Goldman Sachs portfolio company a Caa2 in May. S&P recently gave the company a CCC- and expects it to default over the next six months, amid meat recalls and food-safety write-downs.
Fourteen sponsors had at least two portfolio companies receive distressed ratings: Apollo Global Management (seven); Clayton, Dubilier & Rice (five), Apax Partners and Platinum Equity (four); Ares Management and TPG Capital (three); and Advent International, Bain Capital, Carlyle Group, H.I.G. Capital, Golden Gate Capital, Siris Capital, Sycamore Partners and Thomas H. Lee Partners (two).
Four more companies defaulted since October: one in media and entertainment, one in consumer products and services and retail claimed two more.
LBI Media, the HPS Investment Partners portfolio company, filed for bankruptcy on Nov. 21. LBI Media is a Spanish-language media company with 10 television and 17 radio stations across the country.
In April, Moody’s warned that Checkout Holding, the Berkshire Partners and Hellman & Friedman portfolio company and parent of the marketing provider Catalina, had unsustainably high leverage. It missed its Nov. 30 interest payments, then filed for bankruptcy on Dec. 13.
Apax Partners’ portfolio company FullBeauty Brands Holdings, which sells plus-sized apparel, defaulted when it missed interest payments on its second-lien term loan on Nov. 8.
David’s Bridal, the CD&R portfolio company that last received a selective disclosure from S&P, filed a prepackaged Chapter 11 bankruptcy on Nov. 19.
Download the Distressed Asset report here: Distressed Assets Through Dec 13