S&P downgrades LBI Media

S&P said it lowered the corporate credit rating on LBI Media Inc. to CC from CCC and placed all of the company's ratings on CreditWatch with negative implications.

The agency also said it lowered the rating on the company's first-lien senior secured notes to CC' from CCC+ with a 2 recovery rating.

The 2 recovery rating indicates 70% to 90% expected default recovery.

There is no change to the CC rating or 6 recovery rating on the company's second-lien secured notes. The 6 recovery rating indicates 0 to 10% expected default recovery, the agency explained.

The downgrades are because LBI missed its May 15 interest payment on its 8¾% cash pay and 2¾% payment-in-kind second-priority secured subordinated notes due in 2020.

The company has a 30-day grace period after the interest payment due date to make the payment before an event of default would be declared, S&P noted.

While the agency said it believes the company has sufficient liquidity to make the interest payment before the grace period expires, but the company likely decided to forgo the payment to preserve cash or put pressure on its second-lien noteholders to participate in a subpar debt exchange.

S&P also said it believes the non-payment signals that a restructuring, either out of court or through an in-court reorganization, is likely imminent.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.