S&P downgrades Revel

Standard & Poor's said it lowered the corporate credit rating on Revel AC Inc. to D from CCC, along with the rating on its first-lien term loan to D from CC.

The downgrades follow news that the company plans to restructure through a prepackaged Chapter 11 reorganization, S&P said, and that it did not make the scheduled interest payment due Feb. 19 under its term loan agreement.

A payment default has not occurred relative to the legal provisions of the term loan because there is a three-day grace period in which to make the interest payment, the agency said.

However, S&P said it considers a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial distress.

The company has entered into a restructuring agreement with a majority of its lenders that it will implement through a prepackaged Chapter 11 plan in March 2013. As part of the restructuring, certain of Revel's lenders will provide about $250 million in debtor-in-possession financing, of which about $45 million constitutes new money commitments and about $205 million constitutes pre-petition debt, S&P said.

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