S&P downgrades Tops, notes

S&P said it lowered the corporate credit rating on Tops Holding II Corp. to SD from CC.

At the same time, the agency downgraded the issue-level rating on the company's senior unsecured notes due 2018 to D from CC. The 6 recovery rating is unchanged, indicating an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in the event of a payment default.

All other ratings are unchanged at this time.

S&P said the downgrade follows the announcement that the exchange offer to existing holders of Tops Holding II's senior unsecured notes has been completed. The company exchanged $76.4 million of existing debt for $67.5 million in new notes due 2021 issued by Tops Holding LLC and Tops Markets II Corp. and $9.9 million in cash.

The agency said it views the tender for the 2018 notes as tantamount to default because of the company's distressed financial position and the maturity extension beyond the original term. Certain noteholders did not consent to the exchange, leaving about $9.1 million of senior unsecured notes outstanding that are due June 15, 2018.

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