S&P lowers Lecta

S&P said it lowered its ratings on Lecta Ltd. to CC from CCC+, the €255.5 million of senior secured notes to C from CCC and the issue credit rating on the €115 million super-senior facility to CCC- from B-. The 5 and 2 respective recovery ratings are unchanged.

On Oct. 12, Lecta reported it agreed with most of its lenders to restructure its debt. The restructuring includes the maturity extension of its €115 million super senior facility to 2028, from 2024, the par-to-par exchange of the senior secured floating-rate notes due 2025, split into €200 million and €55.5 million tranches, into a single €255.5 million tranche due 2028 with a payment-in-kind interest payment option; and the issuance of a new €78 million senior facility due 2028 and ranking ahead of the new senior secured notes.

“Even though the transaction implies that Lecta will preserve cash for operations and even though it will likely be accepted by majority lender vote, we view it as distressed. This is because we believe that Lecta's proposed debt maturity extension and its delay in cash interest payments fall short of the original promise, at least without adequate compensation,” S&P said in a statement.

The outlook is negative.

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