Moody's slashes Resolute Investment

Moody's Investors Service said it downgraded Resolute Investment Managers, Inc.'s (RIM) corporate family rating to Caa2 from B2 on review for downgrade, its probability of default rating to Caa2-PD from B2-PD on review for downgrade, its senior secured first-lien bank credit facilities to Caa2 from B1 on review for downgrade and its senior secured second-lien term loan to Ca from Caa1 on review for downgrade.

Moody's also changed the outlook to negative from ratings under review. The rating action concludes the review for downgrade started on May 4.

“The rating action follows RIM's announced agreement with approximately 100% (99.6%) of its lenders to engage in a recapitalization transaction. The recapitalization transaction is expected to close by year-end 2023,” Moody’s said in a press release.

RIM will exchange its $538 million first-lien term loan due April 2024 for a new $350 million loan due April 2027 and 86.5% equity interest in the company’s reorganized equity. It will also exchange the $89 million balance on its second-lien term loan into equity, representing a 13.5% ownership interest in RIM's reorganized equity. Additionally, the company's $40 million revolving credit facility will be extended by three years to January 2027.

“Moody's will likely consider this transaction, if executed as proposed, to be a distressed exchange, given it is likely to result in a loss to creditors pursuant to the exchange of new equity for outstanding debt. If the recapitalization transaction is successful, RIM's debt balance would be reduced by $276 million or 43%. The negative outlook primarily reflects the continued net outflow challenges faced by the company as well as execution risk associated with this transaction,” the agency said.

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