S&P cuts Pluto Acquisition I

S&P said it lowered its ratings on Pluto Acquisition I Inc. to SD, selective default, from CC and its first-lien term loan rating to D, default, from CC.

Pluto Acquisition completed a debt restructuring transaction that included exchanges into new term loans under a new credit agreement. First- and second-lien term loan holders were exchanged into new loans with extended maturities that will rank junior to both a new $175 million first-out obligation and an outstanding revolving credit facility that was previously ranked equally with the prior first-lien term loan, the agency explained.

“We view the transaction as a distressed exchange. The transaction included the exchange of Pluto's $852 million term loan and $282 million second-lien term loan for new second-out and third-out term loans, respectively, which rank below a new $175 million super-priority facility.

“In addition, the company's existing $40 million revolving credit facility was exchanged into an identical credit facility that now ranks pari passu with the new super-priority facility and ahead of the new second-out and third-out term loans,” S&P said in a press release.

The agency noted, “The exchange also includes maturity extensions of 27 months for the prior first-lien lenders and 18 months for the prior second-lien term loan lenders. Prior second-lien lenders also incurred the conversion of 22 months interest to a payment-in-kind (PIK) deferral with a 50 basis point (bps) increase in the interest rate for the first 10 months and 100 bps for months 11-22.”

S&P said it plans to reevaluate the ratings shortly.

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