S&P cuts Renfro

S&P said it lowered its ratings for Renfro Corp. to SD from CCC-, the $220 million term loan to D from CC and its $20 million priming term loan to D from CCC+.

Renfro completed a transaction with approval from all its lenders where it issued a new $10 million super priming term loan facility to fund its operations. This facility included $5 million of new money in the form of a delayed-draw term loan and a $5 million roll-up from the original term loan into the new super-priming term loan.

Renfro also converted the cash interest payments on its original $220 million ($135 million outstanding) term loan due June 2021 to payment-in-kind payments and the interest payments on its $20 million priming term loan due June 2021 from partial cash and PIK interest to all PIK until its maturity with unanimous lender approval.

“We view this transaction as tantamount to a default on the original $220 million term loan and $20 million priming term loan due to the company’s weak operating performance, liquidity constraints, the near-term maturity of its debt facilities, the distressed trading prices of its debt on the secondary market, and the lack of adequate compensation for its existing lenders involved in the transaction,” S&P said in a press release.

The agency said it plans to reevaluate the issuer credit rating on Renfro in the next few days and will likely boost the rating to CCC- given that all of its debt matures in May and June.

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