Standard & Poor’s Ratings Services announced that it has lowered its long-term corporate credit rating of Cinram International Inc. from ‘CC’ (highly vulnerable) to ‘D’ (default). Additionally, Standard & Poor’s has lowered its issue-level rating on Cinram’s senior bank facility to ‘D’ from ‘CC’.
According to the statement, this downgrade results from the completion of Cinram’s refinancing and recapitalization transaction. “We consider the refinancing to be a distressed exchange offer and tantamount to a default under our criteria definition as lenders were asked to agree to exchange a portion of the previous first-lien secured debt into lower priority second-lien debt, as well as to a maturity extension on most of the debt.”
The statement goes on to say that Standard & Poor’s expects to raise these ratings in the near future “representative of our assessment of its improved credit risk post the refinancing and recapitalization transaction.”