S&P lowers Flexi-Van

S&P said it lowered the issuer credit rating on Flexi-Van Leasing Inc. to CC from B-.

The agency also said it lowered the rating on the company's second-lien notes to CC from B-.

The 3 recovery rating is unchanged.

Flexi-Van announced an offer to exchange its existing second-lien notes for new second-lien notes with different terms, including an option to redeem the notes at less than par value, S&P said.

The proposed transaction is considered a distressed exchange that offers debtholders less than the promise of the original notes, the agency said.

S&P said it also continues to view Flexi-Van's liquidity as less than adequate.

The negative outlook reflects an expectation that the agency will lower the ratings on the company and on the notes to SD (selective default) upon completion of the exchange, S&P said.

The downgrades follow news that the company's exchange offer for its second-lien notes, the agency said.

Although the new notes would have a slightly higher coupon rate and substantially identical covenants to the existing notes, S&P said it does not believe this fully compensates creditors.

The agency said it also believes that the full terms of the exchange offer represent less than the promise of the original notes, which is considered a distressed exchange.

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