S&P lowers White Star Petroleum

Standard & Poor’s said it lowered the corporate credit rating on White Star Petroleum LLC, formerly known as American Energy – Woodford LLC, to SD (selective default) from CCC.

The agency also said it lowered the rating on the company’s 12% second-lien notes due 2020 to D from CCC-. The recovery rating on this debt remains at 5, reflecting 10% to 30% expected default recovery.

The rating on the company’s unsecured notes remains at CC and the recovery rating remains at 6.

The 6 recovery reflects indicates 0 to 10% expected default recovery.

The downgrades follow the company’s disclosure that it repurchased $148 million in face value of its 12% second-lien notes for $19.4 million in cash in via several separate open market transactions, S&P said.

These well-below par repurchases are considered distressed exchanges, the agency explained, because there was a realistic possibility of default prior to the transactions.

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