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Weekly Downgrade Wrap-up

Per usual, we have a week’s worth of ratings actions on LBO-backed companies from ratings agencies Standard & Poor’s and Moody’s Investor Services. It’s the second light collection in a row — last week S&P and Moody’s only took a ratings action on one company. This week we have four.

Company Station Casinos Inc.
Sponsor: Colony Capital LLC
Action: S&P lowered its issue-level rating on the business to ‘D’ after it filed for Chapter 11 bankruptcy protection and revised its recovery rating on the company’s senior unsecured notes to ‘5’ from ‘4’. Moody’s downgraded the company’s probability of default rating to D from Ca and downgraded the ratings on the company’s senior secured revolver and term loan were downgraded to Caa3 from B3.
Highlights: From S&P: “This rating action follows our Feb. 4, 2009, research report in which we lowered our corporate credit rating on Station and our issue-level rating on its 6.5% senior subordinated notes to ‘D’ following th” Given the severe challenges faced by the gaming industry and by Station in particular, Moody’s used a fundamental distressed EBITDA valuation (6 times multiple) to estimate loss-give-default rather than the 50% mean family recovery rate.”

Company: Education Management LLC
Sponsor: Providence Equity Partners, Goldman Sachs Capital Partners and Leeds Equity Partners
Action: Moody’s upgraded the company’s corporate family rating to B1 from B2.
Highlights: “The action reflects Moody’s expectations of continued
reduction in financial leverage and ongoing strength in demand for higher education. The upgrade is further supported by stabilization in the availability of, and government commitment to, Title IV funding for student loans. The outlook for the ratings is stable.”

Company: Harman International Industries Inc.
Sponsor: KKR
Action: S&P lowered its corporate credit rating on the company and the rating on the company’s $400 million unsecured notes to ‘B+’ from ‘BB+’ while removing the company from CreditWatch.
Highlights: “The downgrade reflects our assumption that Harman will use more cash and produce lower EBITDA in the next 18 months than we incorporated into the previous rating.”

Company: Veyance Technologies Inc.
Sponsor: Carlyle Group
Action: S&P withdrew its ratings on the company, including its ‘B-‘ corporate credit rating because it no longer has adequate information to rate the business.

Previous Weeks:
Weekly Downgrade Wrap-Up 22
Weekly Downgrade Wrap-Up 21
Weekly Downgrade Wrap-Up 20
Weekly Downgrade Report 19
Weekly Downgrade Report 18
Weekly Downgrade Report 17
Weekly Downgrade Report 16
Weekly Downgrade Report 15
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Weekly Downgrade Report 2
Weekly Downgrade Report 1