Prospect News marks five defaults for May 10 to May 16, S&P sees one

By Caroline Salls

Pittsburgh, May 18 - Prospect News reported five new defaults for the week of May 10 to May 16.

The latest defaults came in the form of Chapter 11 bankruptcy filings made by Residential Capital, LLC and LightSquared Inc. and distressed exchanges made by Speymill Deutsche Immobilien Co. plc, DSW Group, Inc. and Houghton Mifflin Harcourt.

These latest defaults increase Prospect News' total of defaults reported so far in 2012 to 74.

Of those, 37 were Chapter 11 filings, nine each were missed interest payments and distressed exchanges, five were Chapter 15 bankruptcy filings, four were missed principal payments, two each resulted from Companies' Creditors Arrangement Act filings and missed principal and interest payments, and one stemmed from corporate debt restructuring, examinership, insolvency, administration, notices of default and acceleration and reorganization.

Prospect News also reported during the week that PetroMena ASA will not make the May 25 principal payment on its 9¾% callable bond issue 2006/2012.

Meanwhile, Standard & Poor's reported one global corporate default for the week, bringing its year-to-date tally to 31.

S&P said it downgraded Verso Paper Finance Holdings LLC during the week after the U.S. coated paper manufacturer completed exchange offers for a portion of its senior subordinated notes due 2016 and floating-rate notes due 2014.

The ratings agency said it views the subordinated notes exchange offer as a distressed exchange under its criteria, and it subsequently lowered its corporate credit rating on Verso Paper to selective default.

S&P said 20 of the total defaulters this year were based in the United States, six in the emerging markets, three in Europe and two in the other developed region, which includes Australia, Canada, Japan and New Zealand.

So far this year, the ratings agency said missed payments accounted for 12 defaults, bankruptcy filings accounted for six, distressed exchanges were responsible for six, and four defaulters were confidential.

Of the remaining defaults, one was the result of a notice of acceleration by the issuer's lender, one stemmed from the company's placement under regulatory supervision, and one resulted from a judicial organization filing.

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