Moody's cuts Bis Industries unit Artsonig’s notes to C

Moody's Investors Service said it downgraded the rating on Artsonig Pty Ltd.’s $250 million five-year senior unsecured PIK notes to C from Caa3.

Artsonig is a wholly owned subsidiary of Bis Industries Group Ltd.

The corporate family rating of Bis Industries remains unchanged at Caa1. Following this action, the outlook on Artsonig Pty Ltd. is stable, while the outlook on the Bis' CFR remains negative.

On July 20, as part of its capital restructure, Bis has announced that Bis, KKR and certain senior lender and PIK noteholder representatives, have agreed to a debt-to-equity swap by way of schemes of arrangement that, subject to receipt of necessary approvals, will result in senior lenders and PIK noteholders assuming ownership of the Bis operating entities. The proposed debt-to-equity swap will reduce total debt by around 80%, or A$1 billion.

“If the transaction proceeds, it will constitute a distressed debt exchange, which is a default event under Moody's definition, given our assessment of the resulting high economic loss when compared to the original payment promise for the senior unsecured PIK notes,” said Shawn Xiong, a Moody's analyst, in a news release.

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