S&P lowers Libbey to SD

Standard & Poor's said it lowered its corporate credit rating on Libbey Inc. to SD (selective default) from B.

The issue-level ratings remain on CreditWatch, where they were placed on June 11 due to the agency's concerns about the difficult operating environment facing Libbey, increased leverage and its ability to improve credit metrics.

The downgrade follows the company's recent announcement that its subsidiary, Libbey Glass Inc., completed the exchange of its $160.9 million senior subordinated secured pay-in-kind notes due 2011 for a combination of new $80.4 million senior secured subordinated PIK notes due 2021, common stock and warrants of the parent company. Under S&P's criteria, the exchange offer was distressed and the completed transaction is tantamount to default.

The agency said it expects to raise the corporate credit rating to B with a stable outlook in the near future. The new rating will reflect S&P's expectation that the company will continue to improve operating performance, credit measures will strengthen and Libbey will achieve significant deleveraging as its EBITDA base recovers.

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