S&P rates 99 Cents loan CC

S&P said it assigned a CC rating and 3 recovery rating to 99 Cents Only Stores LLC's new first-lien term loan due 2022.

The rating is on CreditWatch with positive implications, S&P said.

The company is using the new term loan, along with a new $130 million second-lien term loan, to refinance the company's existing first-lien term loan due 2019, the agency explained.

S&P also said it raised the rating on the company's existing first-lien term loan due 2019 to CC from D as a stub portion remains outstanding.

The agency also placed the rating on CreditWatch with positive implications following the company's completed amendment.

S&P also revised the recovery rating to 3 from 4. The 3 recovery rating indicates 50% to 70% expected default recovery.

The agency said it believes 99 Cents Only's announced separate exchange offer for its senior unsecured notes will constitute a distressed exchange if completed as planned.

Therefore, S&P said it lowered the rating to CC on Nov. 8. The offer is set to expire Dec. 7.

Given a view of the likelihood and timing of a distressed exchange occurring in the near term, the corporate credit rating remains at SD at this time, the agency added.

S&P said it expects to review the corporate credit and issue-level ratings on 99 Cents Only following the completion of the exchange offer, at which time we will reassess the company's revised capital structure and liquidity.

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