Weekly Downgrade Wrap-Up (Including The Tip of The Debt Exchange Iceberg)

As usual, we have a week’s worth of ratings actions on the debt of buyout-backed companies from Standard & Poor’s and Moody’s Investor Services.

These lists have lately become a more of a “limited default” roundup, as such LD and “selective default” ratings actions have dominated them. For the uninitiated, this happens when a company either negotiates for an amendment or covenant relief on its debt, or undergoes a distressed debt exchange. Moody’s and S&P both view such moves as tantamount to default, since the debt in its original terms will not be repaid. If a company’s lenders are nice, the business emerges from these situations with an improved rating on its facilities. If not, the company will likely file for bankruptcy or take a capital infusion from its sponsor.

Unfortunately this is just the beginning, as the “rush to deleverage” the boomtime debt hangover will continue well into 2014. Even last year distressed debt exchanges reached almost $30 billion, up from $15 billion in the previous 24 years combined, according to Reuters.

Company: Broder Bros., Co.
Sponspor: Bain Capital Inc.
Downgrade: Moody’s downgraded the company’s probability of default rating to Ca/LD from Ca and affirmed its corporate family rating of C.
Highlights: “Today’s rating action results from Broder’s announcement that it has completed a financial restructuring,” retiring an aggregate of $213.5 million in principal amount in exchange for $94.9 million of common stock outstanding.

Company: Jarden Corp.
Sponsor: Warburg Pincus
Upgrade: Moody’s upgraded the ratings Jarden Corporation’s senior secured credit facility to Ba2 from Ba3 and its speculative grade liquidity rating to SGL 2 from SGL 3.
Highlights: The upgrade reflects the additional cash from Jarden’s recent equity offering, additional cushion under its financial covenants and the ability to obtain a new revolver upon the maturity of existing revolver in January 2010.

Company: Credit Suisse Private Equity and Perseus LLC
Sponspor: Workflow Management
Downgrade: Moody’s changed the company’s probability of default rating to Caa3/LD fro Caa3.
Highlights: “On April 30, 2009, Workflow concluded an amendment with its senior secured lenders, which included a provision changing the payment of second lien interest to PIK through March 31, 2010, rather than being paid in cash.”

Company: Six Flags
Sponspor: Generation Partners
Downgrade: S&P lowered its rating on Six Flags’ 4.5% senior notes to ‘D’ from ‘CC’ and lowered its rating on the company’s 8.875% senior notes and 9.625% senior notes to ‘C’ from ‘CC’. S&P raised the rating on the company’s 9.75% senior notes to ‘C’ from ‘C’ and raised its rating on the company’s 8.875 senior notes and 9.625 senior notes to ‘C’ from ‘CC’. The corporate credit rating remains ‘D.’
Highlights: If the proposed exchange offer is consummated, S&P expects to lower its issue-level ratings on the 9.75%, 8.875%, and 9.625% notes to ‘D’. This restructuring would reduce debt by slightly over one-third, or about $870 million, and eliminate the company’s preferred stock.

Company: Lazy Days’ R.V. Center
Sponspor: Bruckman Rosser Sherrill & Co.
Downgrade: S&P downgraded the company’s corporate credit rating to ‘SD’ from ‘CC’ and lowered its rating on the company’s unsecured debt to ‘D’ from ‘C’. The ratings were withdrawn at the company’s request.
Highlights: “The company has been discussing a financial restructuring with the noteholders. A bankruptcy filing also is still possible,” said Standard & Poor’s credit analyst Nancy Messer.

Company: Eurofresh Inc.
Sponsor: Bruckmann, Rosser, Sherrill & Co. and Banc of America Capital Partners
Downgrade: Moody’s downgraded its probability of default rating to D from Ca following the company’s filing for Chapter 11 bankruptcy protection.
Highlights: The company and a group of investors have reached an agreement to recapitalize Eurofresh. As part of this negotiated settlement, Eurofresh and its subsidiary Eurofresh Produce, Ltd. filed under Chapter 11.

Company: Integra Telecom, Inc
Sponsor: Boston Ventures Management Inc., Warburg Pincus and Banc of America Capital Investors
Downgrade: Moody’s downgraded the company’s probability of default rating to Ca/LD from Ca.
Highlights: “The conclusion of the review following a successful restructuring may result in an upgrade of the corporate family rating if Moody’s believes that the company permanently right-sized its debt capital structure based on its business plan and path to expand free cash flow growth.”

Previous weeks:

Weekly Downgrade Report 13
Weekly Downgrade Report 12
Weekly Downgrade Report 11
Weekly Downgrade Report 10
Weekly Downgrade Report 9
Weekly Downgrade Report 8
Weekly Downgrade Report 7
Weekly Downgrade Report 6
Weekly Downgrade Report 5
Weekly Downgrade Report 4
Weekly Downgrade Report 3
Weekly Downgrade Report 2
Weekly Downgrade Report 1