Moody's cuts Mega Brands

Moody's Investors Service said it lowered the probability of default rating for Mega Brands, Inc. to D from Caa3 following the completion of its previously announced recapitalization transaction. Its corporate family rating was affirmed at Ca, along with the Caa3 ratings on secured facilities. All of the ratings will soon be withdrawn.

The recapitalization transaction, which returned value to senior secured debt holders at about $0.70 on the dollar in the form of stock and cash funded with new debt, is viewed as a distressed exchange and considered a default, Moody's said.

The ratings reflect the recovery rate, the agency said.

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