S&P trims California Resources

S&P said it downgraded California Resources Corp. to CC from CCC+ and dropped the rating on its 2021, 2022, and 2024 notes to CC. The rating action follows an announcement of a debt exchange offer targeting its second-lien notes due 2022 as well as its remaining unsecured notes due 2021 and 2024. The outlook is negative.

The recovery rating on the 2022 second-lien notes remains 2, indicating an expectation of substantial (70%-90%; rounded estimate: 80%) recovery in the event of a payment default. Similarly, the recovery rating on the 2021 and 2024 unsecured notes remains 6, indicating the expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default.

S&P affirmed the B issue-level rating on the company's first-lien loans. The recovery rating remains 1, indicating the expectation of very high (90% to 100%; rounded estimate: 95%) recovery.

Additionally, the company is soliciting consents from holders of each issue to permit the incurrence of more secured debt (requiring at least a majority of the principal amount of each issue). The proposed transactions are not contingent on a minimal amount of notes tendered nor receipt of the aforementioned consents. The offers expire on March 18, with an early participation deadline of March 4. The transaction is currently supported by about 25% of the second-lien notes, 27% of the 2021's and 5% of the 2024's.

Moody's downgrades Greenway

Moody's Investors Service said it downgraded Greenway Health, LLC's corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD. Moody's also downgraded the ratings on the senior secured bank credit facilities to Caa1 from B3. The outlook is negative.

The downgrade reflects Moody's expectations of ongoing operating challenges over the next year following a sharp decline in the company's earnings and weakened liquidity as a result of the settlement reached with the U.S. Department of Justice for $57.3 million in February 2019.

Greenway also incurred associated expenses during 2019 to implement mandated requirements and ensure product compliance. Moody's expects some of these costs to continue into 2020 and 2021. Accordingly, Moody's said it projects the company to sustain very high leverage of around 10x adjusted debt-to-EBITDA with negative free cash flow in 2020.

In addition, class action litigation is in the early stages, which means there is a high level of uncertainty related to potential liabilities.

S&P lowers Ruby Pipeline

S&P said it downgraded its issuer credit rating and senior unsecured debt rating on Ruby Pipeline LLC to BB from BBB-. S&P also placed the ratings on CreditWatch with negative implications.

“The downgrade follows our revised assessment of Ruby's contract profile given our view of the recontracting process and its impact on both the business and financial risk profiles. About 65% of Ruby's firm take-or-pay contracts are set to expire by mid-2021, and we expect significantly lower renewal rates and shorter contracts based on current market conditions,” said S&P in a press release.

“The CreditWatch negative placement reflects our view that liquidity will come under pressure due to refinancing risk over the next two years and a weighted-average maturity of less than two years would lead us to lower the rating by one notch. We expect to resolve the CreditWatch over the next 90 days,” S&P said.

The agency also assigned a 3 recovery rating to Ruby's senior unsecured notes, which suggests meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

S&P ups Edgewell Personal Care

S&P said it raised its issuer rating for Edgewell Personal Care Co. to BB from BB- and its rating on Edgewell’s senior unsecured notes to BB from B+. The upgrades follow the termination of the company’s proposed merger with Harry’s Inc.

“We are also revising our recovery rating on the notes to 3 from 5. The 3 recovery rating indicates our expectation for meaningful recovery (50%-70%; rounded estimate: 65%) in the event of a payment default. The two-notch upgrade of our issue-level rating incorporates one notch associated with the issuer credit rating upgrade and one notch related to the unsecured creditors' improved recovery prospects following the termination of the Harry's transaction, which would likely have added a material amount of priority secured debt to the company's capital structure,” S&P said.

S&P also withdrew the BB ratings on the $1.6 billion senior secured credit facilities that were contemplated for the deal. The outlook is stable.

Fitch upgrades PGS

Fitch Ratings said it upgraded PGS ASA's issuer default rating to B from B- and removed it from rating watch positive. The outlook is stable.

The upgrade indicates receding liquidity risk following the completion of its refinancing and equity-raise as well as improved credit metrics.

Fitch said it now views PGS as better-positioned to absorb future volatility in the oilfield services market, with no near-term maturities while the equity-raise and the amortization schedule of the new debt will aid reducing gross debt to less than $1 billion by end-2020.

S&P revises ION view to negative

S&P said it revised the outlook for ION Geophysical Corp. to negative from stable and affirmed the company’s CCC+ rating as well as the B- rating on its second-lien notes with a 2 recovery rating.

“Our outlook revision to negative reflects the company's need to refinance its second-lien notes due in December 2021 as capital markets for oil and gas service companies remain challenging. Additionally, we do not expect the company to generate sufficient discretionary cash flow or have enough availability on its credit facility to address the entire maturity. Therefore, in our opinion, there is greater risk of the company executing a transaction we could view as distressed,” said S&P in a press release.

S&P revises Mednax view to negative

S&P said it revised the outlook for Mednax Inc. to negative from stable. The outlook revision follows one of the company’s clients, UnitedHealthcare Inc. giving notice it terminated all of the contracts of affiliated practices across four states covering all of the services Mednax physicians provide in those states. Per Mednax, UnitedHealthcare is seeking a 50% reduction in the rates the practices are paid for their services.

The outlook revision reflects the risk Mednax could experience greater-than-expected EBITDA pressure from other adverse contract outcomes if United terminates more contracts than it has announced.

S&P affirmed Mednax’s BB rating.

Moody's assigns Alkermes loan Ba3

Moody's Investors Service said it assigned a Ba3 rating to the new senior secured term loan of Alkermes, Inc., a subsidiary of Alkermes plc. There are no changes to the company's ratings including the Ba3 corporate family rating, the Ba3-PD probability of default rating and the SGL-1 speculative grade liquidity rating. The outlook remains unchanged at stable.

Proceeds will be used to refinance Alkermes' term loan and for general corporate purposes.

Moody's assigns Aptos, loan B3

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to 1236904 BC Ltd. (Aptos) following the announcement of its leveraged buyout. Moody's also assigned a B3 rating to the company's proposed $340 million senior secured first-lien credit facility ($40 million revolver and $300 million term loan). The revolver is expected to be undrawn at closing. The outlook is stable.

Proceeds from the new first-lien term loan, along with a contribution of new common equity from Goldman Sachs merchant banking division and rollover equity from management, will fund the leveraged buyout of Aptos from Apax Partners, refinance debt and pay transaction fees and expenses.

The ratings of predecessor company Aptos, Inc., including the B3 CFR and instrument ratings, will be withdrawn upon closing of the transaction and repayment of debt.

Leverage is expected to remain high and cash flow limited over the next 12-18 months as Aptos continues to accelerate the transitioning of its products and services into the cloud through software as a service offerings.

S&P rates Caldic Midco, facilities B

S&P said it assigned B ratings to Caldic Midco BV and its senior secured revolving credit facility and first-lien senior secured term loan. The agency assigned a 3 recovery rating to the (recovery rate: 55%) to the revolver and term loan. Additionally, S&P assigned a CCC+ issue rating, with a recovery rating of 6 (recovery rate: 0%), to the second-lien term loan. S&P also assigned a B rating to Cadic Investments BV.

Caldic sold its tank storage and production facilities in Europoort, The Netherlands, at the end of January. The sale will generate cash proceeds of €179 million, and the company intends to use these funds, alongside its cash balance, to repay €87 million of its debt. Caldic also intends to pay a one-time dividend of €115 million to its shareholders.

After the divestment and financing the transaction, Caldic's cash balance will decrease by about €50 million. “We consider this proposed transaction to be aggressive; it will elevate leverage beyond 8x, as measured by S&P Global Ratings, on a pro forma basis for 2019 (excluding divested assets' EBITDA),” said S&P in a press release. The outlook is negative.

S&P rates SAIC loan BB+, notes BB-

S&P said it assigned a BB+ rating with a recovery rating of 4 to Science Applications International Corp.'s proposed $600 million incremental term loan B due 2027. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery. The agency also assigned a BB- issue-level rating and 6 recovery rating to SAIC's proposed $400 million of unsecured notes due 2028. The 6 recovery rating indicates an expectation for negligible (0%-10%; rounded estimate: 0%) recovery.

At the same time, S&P revised the recovery rating on the company's secured credit facility, which comprises a $400 million revolver due 2023, a $1.068 billion term loan A ($918 million outstanding as of Nov. 1, 2019) due 2023, and a $1.05 billion term loan B ($1.039 billion outstanding) due 2025, to 4 from 3. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery.

The company plans to use the proceeds, along with cash on hand, to fund its recently announced $1.2 billion acquisition of Unisys Federal.

S&P upgraded Aenova

S&P said it upgraded Aenova Holding GmbH to B-. S&P previously assigned a B- rating to the company’s new €440 million first-lien loan and new €50 million revolving credit facility.

The terms of the new debt match those reported on a preliminary basis. Aenova is also seeing the first signs of an operational turnaround and the new capital structure should give it more headroom for improvement, the agency said.

As a result, S&P said it no longer views Aenova's capital structure as unsustainable. In addition, Aenova amended the documentation for its €208 million shareholder loan and S&P now considers the loan to be equity instead of debt.

S&P gives Alkermes loan BB

S&P said it assigned a BB rating to Alkermes plc’s proposed $350 million term loan B. The recovery rating is 2 reflecting the expectation for substantial recovery (70%-90%; rounded estimate: 70%) in the event of a payment default.

Alkermes is using the new loan due in 2025 to refinance its term loan with $279 million outstanding.

S&P also revised the outlook for the company to negative from stable. The outlook revision reflects the risk cash flow will not turn positive in 2021. “While we previously believed that Alkermes' transitional period was nearing its end, operating performance over the past year was heavily impaired following patent expirations on royalty products (Ampyra), a rejected new drug application for its ALKS 5461, and significantly increased selling, general, and administrative (SG&A) costs related to the commercialization of Aristada,” S&P said in a press release.

S&P affirmed Alkermes’ BB issuer credit rating.

Fitch pulls Apollo Investment ratings

Fitch Ratings said it affirmed the long-term issuer default rating, senior secured debt rating and senior unsecured debt rating of Apollo Investment Corp. (Apollo) at BB+, and withdrew the ratings. Fitch said the withdrawal was for commercial purposes.

S&P sinks VIP Cinema

S&P downgraded the ratings on VIP Cinema and its senior secured first-lien debt to D from CCC after the company filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code.

The agency downgraded the rating on the second-lien debt to D from C. The recovery ratings on the debt are unchanged.

S&P cuts 3M

S&P said it downgraded 3M Co.’s ratings, including its issuer credit rating to A+ from AA-. The outlook is negative.

“The downgrade and negative outlook reflect continued pressure from 3M's underperforming end markets, which we believe could continue into 2020, leading to credit metrics (already stretched for the rating) that are weaker than we originally anticipated. The company's acquisition of Acelity, the largest in its history, in late 2019 was primarily debt-funded and adds further pressure to the metrics,” said S&P in a press release.

Moreover, potential perfluoroalkoxy alkanes liabilities remain an overhang to the rating. “We have not quantified potential reserves or settlements, but adverse events could significantly weaken the company's already stretched credit metrics,” the agency said.

S&P ups Delphi Financial

S&P said it upgraded + Delphi Financial Group Inc. to A- from BBB. The agency said it views Delphi and HCC Insurance Holdings Inc. as core units of Tokio Marine Group. S&P affirmed HCC’s A- rating.

The upgrade on Delphi and affirmation on HCC reflect the support provided by the parent to the holding company and the benefits from a less-restrictive regulatory environment, this has bolstered cash flow to debt holders and supported the group's liquidity needs, S&P said.

The outlook on Delphi and HCC is positive reflecting the positive outlook for Tokio Marine Group.

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