S&P drops Chesapeake notes

Standard & Poor's said it lowered its issue-level ratings on Chesapeake Corp.'s 7% euro-denominated senior subordinated notes due 2014 and industrial revenue bonds due 2019 to D from CC.

The agency said that the ratings action stems from its assessment that Chesapeake's ability to service its interest payment obligations under these debt instruments, including the Dec. 15, coupon payment on the euro-denominated notes, was likely blocked by the secured lenders on Chesapeake's $250 million revolving credit facility.

S&P said that this is due to the company's distressed financial situation, which was caused by deteriorating cash flow and high leverage, while a payment default has not occurred relative to the legal provisions of the notes.

However, the agency said it considers a default to have occurred when a payment related to an obligation is not made, even if a grace period exists, if the nonpayment is a function of the borrower being under financial stress.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.