Moody’s downgrades Ace Cash

Moody's Investors Service said it downgraded Ace Cash Express, Inc.'s corporate family rating and senior secured rating to Ca from Caa1.

The outlook is stable.

The downgrades follows Ace's announced note exchange and cash tender offer, which is viewed as a distressed exchange and default under Moody’s criteria, the agency said.

The company is offering to exchange $252 million, or 76% of its $332 million 11% senior secured notes due February 2019, into new notes maturing in 2022, Moody’s explained.

Ace's sponsor, JLL Partners, which holds the remainder of the notes, will not participate in the exchange offer, but will instead exchange its holdings for the new notes as per a separate exchange agreement, the agency said.

Concurrently with the exchange offer, the sponsor also is commencing a cash tender offer for up to $73.5 million, or 22% of the total amount of the notes, which will be conducted through a modified Dutch auction, Moody’s said.

The agency said it considers the company’s untenable capital structure with substantial tangible equity deficit and large amounts of debt, along with the substantial losses expected for bondholders on the cash tender offer.

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