S&P lowers Shutterfly

S&P said it lowered its ratings on Shutterfly Inc. (Photo Holdings LLC) and its secured debt to CC from CCC and placed the ratings on CreditWatch with negative implications.

Earlier this week, Shutterfly started an exchange offer that will exchange the company's term loan, secured notes and revolving credit facility for debt at a newly formed subsidiary.

S&P said it considers the exchange offer distressed and equivalent to default because the exchange price represents 90 cents on the dollar; it lowers first-lien debt to a second-lien position; and shifts the interest rate to payment in kind from cash.

The new subsidiary would not guarantee the outstanding term loan and senior secured notes.

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