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S&P cuts Strategic Materials Holding
S&P said it downgraded Strategic Materials Holding Corp. and its first-lien credit facilities to CCC from CCC+. The agency also lowered the second-lien term loan to CC from CCC-. The recovery ratings are unchanged.
“Houston-based glass and plastic recycling company Strategic Materials Holding Corp.'s (SMI) cash flows remains tight, as weaker economic conditions and high interest burden from its recent Canadian term loan issuance jeopardize its ability to improve cash flow generation,” said S&P in a press release.
“We believe this additional debt, combined with headwinds related to the coronavirus pandemic and a U.S. recession limit the company's ability to significantly improve financial performance and generate sufficient cash flow. Therefore, in our view there is an increased likelihood SMI could restructure its debt in a transaction that provides lenders less than originally promised, which could include a renegotiation of its interest payments,” S&P said.
The outlook is negative.
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