S&P trims KCIBT loan

S&P said it lowered the long-term issuer credit rating on KCIBT Holdings LP to SD (selective default) from CCC+ and the issue-level rating on the company's second-lien term loan due 2025 to D (default) from CCC.

“We intend to subsequently reassess our ratings on the company and its debt over the next several days and anticipate raising the issuer credit rating back to the CCC category,” S&P said in a news release.

The downgrade follows the company's second-lien term loan amendment completed on July 20, which allows CIBT to elect to partially pay PIK interest (6.75% PIK / 1% cash-pay of the total 7.75% coupon) on its second-lien term loan due 2025 through the quarter ending March 30, 2022, S&P said.

The amendments also extended the revolving credit facility by 21 months to March 2024 from June 2022, and materially relaxed the company's financial covenants.

“We view the amendment as tantamount to a default because lenders are receiving less than originally promised given that the timing of interest payments has slowed, and the deferred PIK interest payment represents an additional risk to lenders,” S&P said in the release.

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