S&P cuts CDRH Parent

S&P said it downgraded CDRH Parent Inc.’s issuer rating to SD from CCC- and the second-lien term loan due in 2022 to D from C. The recovery rating remains 6, reflecting an expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default.

CDRH amended its credit agreement to provide covenant relief and improve liquidity. Second-lien lenders agreed to convert cash interest payments to payment-in-kind interest for three quarters (starting Sept. 30). In return, the company agreed to a small increase in overall interest (cash interest plus PIK) for the first quarter, S&P said.

“We lowered the issuer credit rating and the second-lien debt rating on CDRH to reflect our view of the distressed nature of the recently completed credit agreement amendment. This view incorporates our belief CDRH may be unable to refinance its debt, which matures shortly,” S&P said in a press release.

The rating on the first-lien debt is unaffected. The recovery rating is 4, reflecting an expectation of meaningful (50%-70%; rounded estimate: 40%) recovery.

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