S&P downgrades O1 Properties

S&P said it downgraded O1 Properties Ltd. to CCC- from CCC and placed the rating on CreditWatch with negative implications and lowered the issue ratings to CC from CCC-.

“Contrary to our previous expectations, O1 has failed to extend its mezzanine debt maturity, increasing the chances of a default. The downgrade reflects our view that the probability of O1's payment default on its about $145 million mezzanine loan due at the end of April 2020 has materially increased,” said S&P in a press release.

O1's ability to repay debt from its own cash flows or through raising new debt is virtually nonexistent. The company has had negative operating cash flows in the past three quarters.

“The CreditWatch negative reflects our view that we may downgrade O1 at the beginning of April 2020 if it does not secure repayment sources for its mezzanine loan, which would increase the probability of a near-term default and distressed exchange,” S&P said.

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