S&P lowers Canyon first-lien debt

S&P said it affirmed its B corporate credit rating on Canyon Cos. Sarl. The outlook remains stable.

At the same time, S&P lowered its issue-level rating on the company's senior secured first-lien term-loan to B from B+ and revised the recovery rating to 3 from 2. The 3 recovery rating indicates an expectation for significant recovery (50%-0%; rounded estimate: 65%) of principal in the event of payment default.

S&P also withdrew its ratings on the company's senior secured second-lien facility.

Canyon will use the proceeds from the $131 million add-on to its first-lien credit facility and the $325 million capital contribution from its merger with Capitol Acquisition Corp. III to repay the second-lien facility.

S&P said the rating actions reflect Canyon's increased first-lien debt in its capital structure and reduced recovery prospects that results.

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