S&P downgrades Tousa

Standard & Poor's said it lowered Tousa Inc.'s corporate credit rating to D from CC, its $300 million 9% senior notes due 2010 and $185 million 10 3/8% senior subordinated notes due 2012 to D from C and its $200 million senior secured first-lien term loan to CC from CCC-. The recovery rating on the loan remains 2.

The agency also affirmed the C ratings assigned to the company's $250 million 8¼% senior notes due 2011, $125 million 7½% senior subordinated notes due 2011, $200 million 7½% senior subordinated notes due 2016 and $300 million senior secured second-lien term loan. The recovery rating on the second-line term loan remains 6.

The outlook is negative.

The downgrade follows the company's announcement that it failed to make scheduled interest payments on the 9% notes and 10 3/8% notes. This payment default could trigger acceleration of additional long-term debt if Tousa does not make the delinquent interest payments within a 30-day grace period.

Tousa previously announced that it amended its first-lien term loan and revolving credit agreements. The amendments extend through Feb. 1 and include a requirement that Tousa operate under a cash flow budget that does not provide for payments on its long-term debt, S&P said. Tousa's next debt service obligation is the Jan. 15 scheduled semiannual interest payment on its 7½% notes.

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