S&P cuts American Gilsonite, notes

S&P said it lowered its corporate credit rating on American Gilsonite Co. to SD from CCC-.

The agency also downgraded its issue-level rating on the company's senior secured notes to D from CCC-. The 4 recovery rating is unchanged, indicating an expectation for average recovery (30%-50%; upper half of the range) of principal in the event of a payment default.

The action follows American Gilsonite's election to not make an interest payment on its senior secured notes and to enter into a 30-day grace period while it continues to negotiate a debt restructuring with its lenders.

"Technically, a payment default has not yet occurred under the indenture governing the notes, which provides a 30-day grace period," S&P credit analyst Ryan Gilmore said in a news release.

"However, we believe there is a high likelihood that the company will not make the interest payment in full within the stated grace period given that the company is in negotiations with lenders to restructure this debt."

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