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S&P: Rodan & Fields in default
S&P lowered the issuer credit rating on Rodan & Fields LLC to default from CCC-.
The agency also lowered its issue-level rating on the company’s $200 million senior secured revolver due in June 2023 and $600 million term loan due in June 2025 to D, from CCC-.
The lowered rating was due to recapitalization agreements the company reached with its lenders to restructure its existing capital structure.
Participating lenders have agreed to extend the maturities of its revolving credit facility to 2027 from 2023 and term loan to 2027 from 2025 in exchange for a security position ahead of nonconsenting lenders, the agency said.
R+F will also purchase on the open market $50 million of its revolver balance which will be converted into the third-out tranche of the extended term loan.
The agency noted that the previous $600 million term loan will be divided into potentially three tranches, including a $137 million super-priority, second-out term loan (consisting of lenders who contributed new money totaling $30 million) and $269 million extended third-out term loan, with nonconsenting lenders representing about $200 million receiving a fourth-priority position and no maturity extension.
Nonconsenting lenders now have the option to have debt purchased by the company at a 27.5% discount through April 17 for equity interests and a consent fee or a 32.5% discount and no equity interest or consent fee from April 17 to April 26.
The agency expects it will reevaluate and raise the company rating to CCC in the near future, given the expectation for unsustainable leverage and risks pertaining to the final terms of the revised capital structure.
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