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S&P cuts Gibson Brands, notes
S&P said it lowered its corporate credit rating to CCC- from CCC on Gibson Brands Inc.
The outlook is negative.
At the same time, the agency lowered the issue-level rating on the company's $375 million senior secured notes due August 2018 to CCC- from CCC. The recovery rating remains 4, indicating an expectation for an average (30%-50%; rounded estimate 30%) recovery in the event of payment default.
“The downgrade reflects the increased likelihood that Gibson Brands could experience a near-term liquidity shortfall and default on its debt if lenders choose to accelerate debt payments,” S&P said in a news release.
“The company's operating performance continues to be weak as it works through the lingering effects of the early 2017 implementation of rosewood regulations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), as well as reduced pay terms from suppliers.”
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