S&P lowers BIS Industries

S&P said it lowered the long-term corporate credit rating on BIS Industries Ltd. to CC from CCC-.

The outlook on the rating is negative.

The agency also said it affirmed the C rating on the company's payment-in-kind (PIK) notes issued by its related entity Artsonig Pty Ltd.

The recovery rating on the PIK notes remains at 6, indicating negligible recovery prospects in a default.

S&P said it lowered the corporate credit rating because the company has announced that it has reached an agreement in principle with its lenders for the recapitalization of its balance sheet.

The agreement establishes a proposed recapitalization of BIS by way of a scheme of arrangement, which would include a debt-for-equity swap for both the lenders and subordinated PIK noteholders, the agency explained.

The proposed transaction will extinguish about A$1 billion or 80% of the company's total outstanding debt, S&P said.

Although the agency is lowering the rating, S&P noted that a reduction in leverage will be positive overall and should result in a more sustainable capital structure.

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