S&P cuts W3 Topco to D

S&P said it lowered its corporate credit rating on W3 Topco LLC to D from CCC.

At the same time, S&P lowered the issue-level rating on the company's first-lien term loan, first-lien notes and revolver to D from CCC and second-lien term loan to D from CC.

The recovery rating on the first-lien term loan, first-lien notes and revolver remains 4, indicating average (30%-50%; rounded estimate: 45%) recovery in the case of a payment default. The recovery rating on the second-lien term loan remains 6, indicating negligible (0% to 10%; rounded estimate: 0%) recovery in the case of a payment default.

“The downgrade reflects our assessment that the debt exchange for new equity and debt on W3's entire $480 million outstanding balance was a distressed exchange based on the holders receiving less than face value, and our view that the company faced a realistic possibility of a conventional default prior to the exchange,” said S&P credit analyst Kevin Kwok in a news release.

“Because the company has restructured all of its debt, we consider this as tantamount to a general default, and are revising the corporate credit rating to D.”

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