6 months ago
Victoria PLC downgraded to ’SD’ after completing distressed debt exchange
Investing.com -- S&P Global Ratings has downgraded Victoria PLC to ’SD’ (selective default) from ’CCC-’ after the company completed what the rating agency considers a distressed debt exchange.
The flooring manufacturer settled an exchange offer on Wednesday for its existing senior secured notes due in 2026, having received consent from more than 98% of bondholders. The transaction involved exchanging €489 million in senior secured notes due August 2026 for new €612 million first-priority senior secured notes due 2029.
For the small percentage of 2026 noteholders who did not participate, Victoria amended the indenture to reduce the cash interest rate to 1% from 3.625% and extended the maturity date to 2031.
The company also executed a supplemental indenture to make amendments to both the 2026 and 2028 bond indentures after receiving majority consent representing approximately 78% of combined 2026 and 2028 noteholders.
S&P Global Ratings classified the transaction as distressed because it resulted in nonparticipating noteholders, particularly the 2028 noteholders, being moved to a more junior position without adequate compensation. The rating agency views this as offering these lenders less than originally promised, which it considers equivalent to a default.
In addition to downgrading Victoria’s issuer credit rating, S&P also lowered its rating on the company’s senior secured debt to ’D’ from ’CCC-’.
The rating agency indicated it will review Victoria’s rating in the coming days to incorporate the new capital structure, business parameters, cash flow prospects, and liquidity position. S&P expects to raise its ratings on Victoria and assign a rating to the new €612 million first-priority senior secured notes, taking into account these factors and the company’s expected operating performance over the next 12 months.
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