S&P Global Ratings lowered Murray Energy Corp.'s corporate credit rating to CC from B-, citing a "distressed" private exchange offer between the company and its noteholders.
The company entered into a transaction support agreement with its noteholders and lenders to exchange roughly 71% of its $996 million 11.25% notes due 2021 for new 12.00% senior secured notes due 2024, at an exchange rate of $740 in aggregate principal amount of new notes for each $1,000 in aggregate principal amount of 11.25% notes exchanged.
"We consider the exchange offer tantamount to a default because it implies investors will receive less value than the promise of the original securities and because the offer is distressed, rather than opportunistic," the rating agency said June 6.
Moody's also said it would consider the financing deal a limited default.
S&P lowered the issue-level ratings on Murray's senior secured notes and term loans to CC and placed all of the company's ratings on CreditWatch with negative implications, to reflect its expectation that it will lower the corporate credit rating to SD and the issue-level ratings, subject to the exchange offer, to D once the transaction is completed.
Murray has adjusted leverage of 8.5x as of March 31, S&P said, including almost $2 billion of pension and post-retirement obligations. Its $225 million asset-based lending revolver, which has $147 million in outstanding letters of credit as of the end of March, is coming due in December.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
