S&P downgrades UTGR

Standard & Poor's said it lowered UTGR Inc.'s corporate credit rating to D from CCC-, first-lien senior secured credit facilities to CCC from CCC+ and second-lien senior secured term loan to D from C.

All ratings were removed from CreditWatch, where they were placed with negative implications on March 4, 2008.

The downgrade follows the company's announcement that it secured an extended forbearance agreement with the first-lien lenders that expires Jan. 31. Under the terms of the forbearance agreement, UTGR will suspend interest payments to its second-lien lenders.

UTGR did not make the Sept. 2 interest payment on the second-lien term loan. The agency said this constitutes an event of default under the second-lien credit agreement, although an intercreditor agreement between the first- and second-lien creditors contains a 180-day standstill, delaying the second-lien lenders' ability to accelerate the loan.

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