S&P puts LSB on positive watch

S&P said it placed all its LSB Industries Inc. ratings on CreditWatch with positive implications.

LSB reported it inked a definitive agreement with LSB Funding LLC, an affiliate of Eldridge Industries, to exchange its 14.5% series E-1 and series F-1 redeemable preferred stock into common equity. The company needs approval from the majority of non-Eldridge-affiliated shareholders to move forward.

“The positive CreditWatch placement stems from our expectation that if the company receives the necessary shareholder approval and closes the exchange offer, its credit metrics will improve materially, such that debt to EBITDA will fall to between 5x-6x on an S&P Global Ratings-adjusted, weighted-average basis. As we currently treat the approximately $300 million of preferred stock as debt-like, LSB's adjusted credit metrics will improve substantially following the conversion,” S&P said in a press release.

If the deal goes through, S&P said it would no longer consider LSB’s capital structure and leverage as unsustainable.

The agency aims to resolve the CreditWatch within the next few months if LSB gets shareholder approval and the deal goes forward.

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