S&P cuts Wheel Pros

S&P said it lowered its ratings for Wheel Pros Inc. to SD, selective default, from CCC and its senior secured debt to D, default, from CCC. The agency affirmed the issue-level rating on the company's senior unsecured debt at CC.

“The downgrade follows the completion of the first part of the company's debt restructuring, which we view as distressed. Wheel Pros completed the first part of its debt restructuring, which involved an agreement with about 70% of its term loan debtholders to immediately contribute $144 million to a new money FILO (first-in, last-out) loan. In addition, these existing term loan holders participated in a new first-lien loan in the amount of $723 million to fund an open market purchase of the existing term loan of $808 million principal value,” the agency said in a statement.

Additionally, some unsecured noteholders also participated in a new $272 million second-lien note to fund the purchase of $272 million of outstanding unsecured notes. “We don't consider the unsecured exchange as distressed because exchangers received par with the same interest payments and a second lien on term loan collateral. Those that weren't offered the unsecured exchange retain their original claims,” S&P said.

Once the second part of the restructuring is completed, S&P said it plans to review the new capital structure and will probably raise the rating back to the CCC category.

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