Prospect News reports two new defaults for Dec. 6 to Dec. 12, S&P one

By Jim Witters

Wilmington, Del., Dec. 14 - Prospect News reported two new defaults for the period of Dec. 6 through Dec. 12, while Standard & Poor's reported one.

Norse Energy Corp. ASA U.S. subsidiary Norse Energy Corp. USA filed Chapter 11 bankruptcy on Dec. 6.

LCI Holdco, LLC, parent company of LifeCare Holdings, Inc., its wholly owned direct and indirect subsidiaries and some affiliates filed Chapter 11 bankruptcy on Dec. 11.

Prospect News has reported a total of 144 defaults so far in 2012.

Of those, 82 were Chapter 11 filings, 13 stemmed from missed interest payments, 10 were from distressed exchanges, eight stemmed from missed principal payments, six were from Chapter 15 bankruptcy filings, five each resulted from Companies' Creditors Arrangement Act filings and missed principal and interest payments, three were from administrations, two were from liquidations and one each stemmed from Chapter 9 bankruptcy filings, corporate debt restructuring, examinership, notices of default and acceleration, bankruptcy, reorganization, insolvency, restructuring, missed payment and Chapter 7 bankruptcy filings.

The default reported by Standard & Poor's was Energy Future Holdings Corp., formerly known as TXU.

Energy Future Holdings completed a private transaction with some lenders to exchange about $1.6 billion in unsecured pre-leveraged buyout debt and senior unsecured leveraged-buyout-related debt.

Standard & Poor's Ratings Services views this transaction as tantamount to a distressed debt exchange, so it lowered the corporate credit rating on Energy Future Holdings to "SD."

The default raises S&P's global corporate default tally to 79 issuers so far in 2012.

By region, 45 of the 79 defaulters were based in the United States, 22 in the emerging markets, nine in Europe and three in the other developed region (Australia, Canada, Japan, and New Zealand).

In comparison, the 2011 total (through Dec. 12, 2011) was 46, with 34 issuers based in the United States, four in Europe, three in the emerging markets and five in the other developed region.

So far this year, S&P reports that missed payments and bankruptcy filings have accounted for 22 defaults each, distressed exchanges have accounted for 16, and 13 are confidential. The remaining six entities have defaulted for various other reasons.

In 2011, 21 issuers defaulted because of missed interest or principal payments, and 13 defaulted because of bankruptcy filings - both of which were among the top reasons for defaults in 2010. Distressed exchanges - another top reason for default in 2010 - followed with 11 defaults in 2011. Of the remaining defaults, two issuers failed to finalize refinancing on bank loans, two were subject to regulatory action, one had its banking license revoked by its country's central bank, one was appointed a receiver, and two were confidential.

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