Neovia Logistics LP Ratings Lowered To #SD# From #CC# On PIK Exchange Ratings Removed From CreditWatch Negative

Stocks and Financial Services Press Releases Tuesday March 21, 2017 09:18
NEW YORK--21 Mar--S&P Global Ratings

NEW YORK (S&P Global Ratings) March 20, 2017--S&P Global Ratings said today that it lowered its corporate credit rating on U.S.-based logistics provider Neovia Logistics LP and Neovia Logistics Intermediate Holdings LP to 'SD' from 'CC' and removed all ratings from CreditWatch, where they were placed with negative implications on Jan. 11, 2017.

At the same time, we lowered our issue-level rating on the senior unsecured PIK toggle notes issued by Neovia's subsidiaries to 'D' from 'C'. The '6' recovery rating is unchanged, indicating our expectation for negligible recovery (0%-10%; rounded estimate: 0%) in the event of a payment default.

Additionally, we affirmed our issue-level rating of 'CC' on the $465 million senior secured notes maturing in 2020 issued by the company's subsidiaries. The '4' recovery rating is unchanged, indicating our expectation for average (30%-50%; rounded estimate: 35%) recovery in the event of a payment default. Our rating on the senior secured notes reflects our expectation that the company will continue to meet its obligations on the senior secured notes.

The downgrade follows Neovia's completion of an exchange plan for its senior unsecured PIK toggle notes due in 2018. Under the terms of the offer, the company will exchange $620.40 in principal amount of new exchange notes and $379.60 in cash from capital contributed by its owners for each $1,000 par bond retired. The maturity on the new exchanged senior PIK notes will be in 2020 and subject to an interest rate step-up on April 1, 2018. The notes will also be subject to an interest rate step-down that is dependent on the total net leverage ratio of the company. Neovia has also received covenant relief on its revolving credit facility as part of this transaction.

We view the proposed transaction as a distressed exchange under our criteria due to the fact that it is probable the company would default on the existing securities over the near term if the exchange did not occur, the exchange pushes out the maturity on the new notes, and we believe that the value of the exchange consideration is less than promised full payment.


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