S&P downgrades Sterling

S&P said it lowered the issuer credit rating on Sterling Mid-Holdings Ltd. to SD (selective default) from CC and lowered the ratings on the senior notes to D (default) from C.

The downgrade follows Sterling's completion of its exchange offer for DFC Finance Corp.'s existing senior secured notes, S&P said.

The company exchanged 92.4%, or $739.3 million, of its outstanding 10½% senior notes due in 2020 for 12% payment-in-kind toggle notes due in 2020, the agency said.

Of such principal amount, $225.2 million was tendered by its private-equity owner, Lone Star Funds.

Under new terms, LoneStar is expected to buy back at least $50 million of aggregate principal, of which $30 million has been repurchased either through open-market transactions or tender offer over the next few months, the agency said.

Following the exchange offer, the company will have about $60.7 million of senior notes outstanding, S&P explained.

Recently, the company borrowed an extra $40 million by drawing an additional $10 million on its securitization facility for a total outstanding balance of $110 million, S&P added.

The remaining $30 million was injected by LoneStar through $21 million in equity and $9 million in notes payable on demand, the agency said.

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