S&P trims UFS Holdings

S&P said it lowered UFS Holdings Inc.’s issuer rating to CCC- from CCC, its revolver and first-lien term loan to CCC from CCC+ and its second-lien term loan to C from CC. The 2 (rounded estimate: 70%) recovery rating on the revolver and first-lien loan and 6 (rounded estimate: 5%) recovery rating on the second-lien loan are unchanged.

“The ratings downgrade reflects the greater likelihood that UFS will not meet its maturities or financial commitments in a timely manner and the company will likely default on its obligations or engage in a transaction we view as distressed,” the agency said in a press release.

UFS has gotten some temporary relief from its lenders. It obtained waivers for a limited period from its lenders to avoid breaching its financial covenant requirements. However, absent extending or paying off debt, amending covenant issues and improving its liquidity, a default scenario may be imminent, S&P said.

The outlook is negative.

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