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S&P lowers American Greetings, rates loan BB-
Standard & Poor's said the ratings on American Greetings Corp. remain on CreditWatch with negative implications.
The ratings were initially placed on CreditWatch with negative implications in September following news that the company received a going private offer.
The company announced in April that it would merge with Century Intermediate Holding Co.
The agency also said it assigned BB- ratings to the company's proposed $600 million senior secured credit facilities, which consist of a $200 million revolving credit facility due 2018 and $400 million term loan due 2019. The recovery rating on these facilities is 2, indicating 70% to 90% expected default recovery. The ratings are not on CreditWatch, but are dependent on a successful completion of the proposed transaction, S&P said.
Following the closing of the merger, the agency said it anticipates affirming the corporate credit rating at B+.
The agency also said it lowered the rating on the company's $225 million 7 3/8% senior unsecured notes due 2021 to B- from B+ and revised the recovery rating to 6 from 4, indicating 0% to 10% expected default recovery.
The revised recovery rating and lower issue-level rating on these notes will reflect the increase in priority obligations as a result of this proposed refinancing, S&P said.
The agency said it also expects to lower the preliminary rating on the company's senior unsecured shelf to B- from B+.
If the transaction is completed as currently described, the agency said it believes American Greetings' leverage will increase and credit metrics will deteriorate significantly, said Stephanie Harter, an S&P analyst.
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