S&P may cut Gigante

Standard & Poor's said it placed Grupo Gigante SAB de CV's BB long-term corporate credit rating and BB rating on the $260 million senior notes on CreditWatch with negative implications.

The watch placement follows an announcement that the company began an offer to buy back its outstanding 8¾% senior notes due 2016 and a consent solicitation to eliminate or change certain covenants. The offer will expire on Dec. 27.

The price will be 35% of the equity clawback price plus 65% of the fixed spread. The equity clawback price is $1,087.5 per $1,000 note offered. The fixed spread is the present value of $1,043.75 per $1,000 note and the present value interest from the settlement date until April 13, 2011. The discount rate is the sum of a reference yield of 4 7/8% over Treasury notes that expire on April 30, 2011 plus 75 basis points minus interest to the payment date.

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