S&P revises UDG CreditWatch to developing

S&P said it revised the CreditWatch implications on its CC corporate credit rating on the United Distribution Group Inc. (UDG) to developing from negative.

The agency also said it placed the CCC- and C issue-level ratings on the company's senior secured debt on CreditWatch with developing implications.

S&P said it plans to resolve the CreditWatch when the transaction closes, which is expected to occur in August 2018.

The CreditWatch placement follows news that United Distribution reached a definitive agreement to be acquired by SunSource Holdings Inc. for an undisclosed amount.

The agency said it believes that United Distribution's credit quality could improve because it believes it will refinance its existing capital structure when the transaction closes.

If the acquisition closes and United Distribution's debt is repaid, this would resolve the impending liquidity crisis the company faces and effectively eliminates a concern that the company could potentially undergo a distressed exchange from its $236 million first-lien term loan due in October 2018, S&P explained.

Furthermore, the rest of the company's capital structure is due in April 2019, when its $180 million second-lien term loan matures, the agency added.

But if the transaction does not close, S&P said it would continue to view the company's capital structure as highly vulnerable to non-payment given its two upcoming maturities.

The agency said it would anticipate a liquidity crisis and expects default to be a virtual certainty absent some form of refinancing, restructuring or distressed exchange of its upcoming maturities.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.