As usual, I have a week’s worth of Moody’s and S&P downgrades on PE-backed companies. This week was a down week, with a mere four downgrades compared with last week’s , and one withdrawal – Fenway Partners’ suitcase maker, Targus Group. S&P also withdrew the rating for Pegasus Capital’s Merisant Worldwide, the sugar maker that went bankrupt last month.
Our downgraded company’s sponsors include ABRY partners, Banc of America Capital Investors, Generation Partners, and Welsh Carson.
Company: Targus Group
Sponsor: Fenway Partners
Withdrawal: S&P has withdrawn its ‘CCC+’ corporate credit rating for Targus at the company’s request.
Withdrawal: Moody’s changed the outlook on Targus International to “negative” and affirmed its Caa1 rating. The ratings agency withdrew its ratings on the company.
Company: Nexstar Broadcasting Group
Sponsor: Banc of America Capital Investors, ABRY Partners LLC and Fidelity Investments
Downgrade: S&P Downgraded the company’s corporate credit rating to ‘CC’ from ‘B-‘ because the company announced a debt exchange offering. The ratings agency also lowered its issue-level rating on Nexstar’s 7% senior subordinated notes due 2014 to ‘C’ from ‘CCC’.
Highlights: In the absence of this (exchange offering), we believe that Nexstar would probably violate its total leverage covenant in the first or second quarter of 2009. We therefore view this transaction as a distressed exchange.
Company: Six Flags
Sponsor: Generation Partners
Downgrade: Moody’s downgraded the company’s corporate family rating and probability of default rating each to Ca from Caa2.
Highlights: The downgrades reflect the high probability that Six Flags will restructure its highly leveraged balance sheet as it seeks to address the August 2009 mandatory redemption of its Preferred Income Redeemable Securities (PIERS). An inability to fund the approximate $310 million PIERS redemption would constitute a default
Company: Local Insight Regatta Holdings Inc
Sponsor: Welsh Carson (owns parent company Local Insight Media)
Downgrade: Moody’s lowered the company’s corporate family rating and probability of default rating each to Caa1 from B2.
Highlights: The Caa1 incorporates Local Insight Regatta’s reliance upon the thin-margined sales and marketing business, its dependence upon successfully renewing contracts with independently-owned directory publishers upon favorable terms and conditions, and the weak recovery prospects facing debtholders in a distress scenario.