S&P nips Matalan

S&P said it downgraded its ratings on Missouri TopCo Ltd. (Matalan) and its first-lien senior secured notes to CCC- from CCC and the second-lien secured debt to C. The 3 recovery rating on the senior secured notes and the 6 rating on the second-lien debt are unchanged.

“We think Matalan faces a higher risk of restructuring some of its debt instruments than we had previously anticipated, despite the recent six-month maturity extension agreed with the lenders of its £350 million senior secured notes, now due on July 31, 2023 (concurrent with the £60 million asset-backed loan [ABL]),” S&P said in a press release.

The agency noted the company is in a strategic sale process that will probably close in the next few months in either a sale or a recapitalization. “Both options would require the group to change its capital structure, escalating the risk of a distressed debt exchange over the next six months absent unanticipated significantly favorable circumstances, in our view.”

The outlook is negative.

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