S&P ups KNS, lowers loan

S&P said it raised its ratings on KNS Holdco LLC to CCC+ from SD, selective default, but lowered the rating on its first-lien senior secured term loan to CCC+ from B- and removed the rating from CreditWatch, where it was placed on Dec. 22 with negative implications. The recovery rating is 3, indicating meaningful (50%-70%; rounded estimate: 60%) recovery in default. The agency assigned a negative outlook.

The rating actions follow KNS completing a transaction with its second-lien lenders, which S&P said it considers a distressed exchange.

“We view KNS' capital structure as unsustainable in the long term on the basis of weak interest coverage, despite incremental liquidity benefits from the recently effective payment-in-kind (PIK) transaction,” the agency said in a press release.

The negative outlook reflects the possibility of a downgrade over the next 12 months.

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