S&P cuts KNS Holdco to SD

S&P said it lowered its issuer credit rating on KNS Holdco LLC to SD (selective default) from B-.

The B- issue-level rating on the company's first-lien secured debt remains on CreditWatch, where S&P placed it with negative implications on Dec. 22.

KNS has converted its existing second-lien term loans to provide payment-in-kind interest, rather than cash interest, over the next six quarters ending after the first quarter of 2025.

Additionally, the company recharacterized $27 million of its existing second-lien term loan as first-lien debt. The second-lien lenders also provided $10 million of new pari passu first-lien debt. Both instruments will feature PIK interest for six quarters ending after the first quarter of 2025.

“We view the transaction as distressed because – absent the additional $10 million liquidity injection and the lenders' consent to defer the cash interest – we believe there was a realistic possibility KNS would experience a conventional default over the medium term,” S&P said in a news release.

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