21 April 2009 23:14 [Source: ICIS news]
HOUSTON (ICIS news)--Standard & Poor’s downgraded all of its credit ratings of US Hexion Specialty Chemicals because the company’s recent debt reduction efforts were equivalent to a default, the ratings service said on Tuesday.
Hexion recently said it bought back notes and debentures that had a face value of $196m (€151m) in exchange for just $26m in cash, S&P said. S&P called this transaction a distressed debt exchange, making it tantamount to a default under the rating service’s criteria.
Hexion recently said it bought back notes and debentures that had a face value of $196m (€151m) in exchange for just $26m in cash, S&P said. S&P called this transaction a distressed debt exchange, making it tantamount to a default under the rating service’s criteria.The ‘SD’ corporate credit rating reflects the expectation that Hexion will continue to pay its other creditors following the completion of its recent debt purchase, S&P said.
Additionally, the ‘D’ ratings on the second-priority senior secured notes and debentures reflect the view that the exchange was distressed as the debt and debenture holders received significantly less than the original price, S&P said.
S&P said it could lower or affirm the ratings within the next two weeks, following a reassessment of the default risk and recovery prospects.
Hexion said on Monday that it expected to post a 2009 first-quarter operating income of between $5m and $15m, down 82-94% from the same period of 2008.
Because of the economic downturn and the expected income decline, the company reduced its debt to $3.45bn from $3.73bn through repurchases of debt securities.
($1 = €0.77)
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