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S&P cuts Kimball Hill to distressed
Standard & Poor's said it lowered Kimball Hill Inc.'s corporate credit rating to CCC+ from B and its senior subordinated notes to CCC- from CCC+. The ratings were placed on CreditWatch with negative implications.
The actions follow Kimball Hill's announcement that it will incur substantial impairment charges for the fourth quarter ended Sept. 30.
S&P said the charges will likely result in violating at least one of the covenants governing Kimball Hill's senior revolving credit facility, as the company's tangible net worth is now expected to fall below the minimum level currently required under the facility. The company also announced that it would be late filing its 10-K form due to its chief financial officer's unexpected medical leave.
Kimball Hill's credit metrics are already poor, with a total debt-to-EBITDA ratio of 7.3 times as of June 30, the agency said.
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