Moody’s drops Jack Cooper notes to Ca

Moody's Investors Service said it downgraded Jack Cooper Holdings Corp.’s $375 million senior secured notes due 2020 to Ca from Caa3.

All other ratings are unchanged at this time, including Jack Cooper Enterprises, Inc.’s Ca-PD probability of default rating, Caa3 corporate family rating and the C rating on its senior unsecured PIK notes due 2019.

The SGL-4 speculative grade liquidity rating also is unchanged and the outlook remains negative.

Moody’s said the action follows the company's recent announcement that it began exchange offers for the $375 million senior secured notes and the remaining roughly $59 million of senior unsecured PIK notes. In the agency’s view, the proposed transactions will constitute a distressed exchange.

Moody's said it expects to append a "LD" to the post-transaction probability of default rating to indicate a limited default upon completion of the exchange offers. This is expected to occur on May 2, unless extended.

“The secured notes are to be exchanged for cash and warrants (to purchase class B non-voting common stock) with the holders recouping about 30% of the original value in cash. The offer on the PIK notes would return about 15% of the original value in cash to the holders,” the agency said in a news release.

“These exchange offers are conditioned on the issuance of new secured notes due 2023, the proceeds of which would be used to fund the associated cash portion and transaction fees.”

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