S&P cuts Dunn Paper

S&P said it cut its ratings on Dunn Paper Holdings Inc. and the company’s first-lien senior secured credit facilities to CCC from CCC+. The recovery rating remains 3, indicating an expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in default.

The agency also lowered the second-lien term loan to CC from CCC-. The recovery rating remains 6, indicating an expectation of negligible (0%-10%; rounded estimate: 0%) recovery in default.

“The downgrade reflects Dunn Paper's increased refinancing risk given its upcoming maturities. Dunn Paper has engaged an advisor to lead its capital structure refinancing efforts. However, we believe there is a heightened risk of default or restructuring due to difficult operating conditions resulting in protracted high leverage and weak liquidity. As of Sept. 30, 2021, the company had $18.3 million outstanding on its revolving credit facility and $259.6 million outstanding on its first-lien term loan, both of which are due Aug. 26, 2022. We believe the company must refinance its capital structure to avoid defaulting on these commitments,” S&P said in a press release.

The outlook is negative.

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