S&P cuts Reddy Ice, notes

Standard & Poor's said it lowered its ratings on Reddy Ice Holdings Inc., including the corporate credit rating, to CC from CCC+. The outlook is negative.

At the same time, the agency said it lowered its issue-level rating on the senior secured notes due 2015, issued by subsidiary Reddy Ice Corp., to CC from CCC+. The recovery rating remains 4.

The agency said it also lowered the issue ratings on Reddy Ice Corp.'s 13.25% senior secured notes due 2015 and Reddy Ice Holdings' 10.5% senior unsecured discount notes due 2012 to C from CCC-. The recovery ratings on these issues remain 6.

S&P said the downgrade follows Reddy Ice's filing with the Securities and Exchange Commission requesting a delay in filing its form 10-K annual report for 2011, as well as news that the company is currently in active discussions with various stakeholders regarding alternatives to modify its capital structure and reduce its leverage. According to S&P, Reddy Ice has indicated that alternatives could include a prepackaged bankruptcy.

"While there has been limited information available since its 2011 third quarter results, we now consider the company's liquidity to be weak and its leverage to be high," said S&P credit analyst Jean Stout in a news release.

If Reddy Ice files for bankruptcy or a similar action, including the potential for a distressed debt exchange, or misses an interest or principal payment, S&P said it would lower the corporate credit and issue-level ratings to D.

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