Moody’s cuts Jack Cooper, notes

Moody's Investors Service said it downgraded Jack Cooper Enterprises, Inc.’s including its probability of default rating to Ca-PD from Caa2-PD and corporate family rating to Caa3 from Caa2.

Concurrently, the agency downgraded the ratings of the $375 million senior secured notes due 2020 (issued by Jack Cooper Holdings Corp.) to Caa3 from Caa1 and the $150 million senior unsecured PIK notes due 2019 (issued by Jack Cooper Enterprises), to C from Ca.

The SGL-4 speculative grade liquidity rating remains unchanged.

The outlook was changed to negative from stable.

Moody’s said the actions follow the company's recent announcement that it began an exchange offer for its senior PIK notes. These are to be exchanged for cash and warrants (to purchase class B non-voting common stock) with the holders recouping no greater than about 30% of the original value.

The agency said it believes the proposed transaction constitutes a distressed exchange and the downgrade of the probability of default rating to Ca-PD reflects the high likelihood of a default in the near term. Moody's expects to append an "LD" to the post-transaction probability of default rating to indicate a limited default upon completion of the exchange offer, which is expected to expire on Dec. 1.

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