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S&P lowers Gerling Global Finance's notes to C
Standard & Poor's downgraded Gerling Global Finance Alpha B.V.'s €220 million subordinated notes to C from CCC.
The downgrade is in response to the company's announcement that it intends to defer the next annual interest payment, scheduled for Aug. 16, 2003.
"Liquidity is at a premium within GKG at present and management feels that, given the ability to defer interest payments on the debt, the cash can currently be put to better use by supporting the orderly run-off of its obligations to policyholders," said Standard & Poor's credit analyst Peter Grant.
Although the deferral of interest does not constitute an act of default under the terms and conditions governing the notes themselves, this action represents a constructive default under S&P's rating criteria. The debt rating will be lowered to D once the due date for the interest payment has passed.
S&P lowers Piccadilly Cafeterias' ratings
Standard & Poor's lowered its corporate credit and senior secured debt ratings on Piccadilly Cafeterias Inc. to CCC- from CCC+. The outlook is negative.
The downgrade is based on the company's announcement that its Board of Directors has authorized management to pursue a range of strategic options including bankruptcy.
"Piccadilly has experienced prolonged sales declines as it struggles to attract a younger segment of the population. The company's sales also have been negatively affected by a reduction in shopping mall traffic related to the general economic downturn," stated Standard & Poor's credit analyst Robert Lichtenstein.
The concern is that continued weakness could further pressure liquidity and credit measures. In addition, covenants currently provide very limited cushion.
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