S&P cuts Mister Car Wash

S&P said it downgraded Mister Car Wash Holdings Inc. to SD from CCC+ citing an amendment to the company’s unrated second-lien term that will let the company make pay-in-kind interest payments for the March, June and September quarters of this year.

“We view the amendment as a distressed restructuring because we believe the delay in cash interest payments due to the PIK feature constitutes less than the original promise without adequate offsetting compensation,” said S&P in a press release.

“In exchange, the second-lien lenders will accrue 10˝% PIK interest in the March and June quarters and 11% PIK interest in the September quarter, after which the coupon will revert back to the original 10% cash payment. We note that the company exercised the PIK interest option in March and has the ability to make either PIK or cash payments in June and September,” S&P said.

S&P said it affirmed the first-lien debt because it’s unaffected by the restructuring.

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