On March 23, 2016, Standard & Poor’s Ratings Services lowered its corporate credit rating on American Media, Inc. to SD from CCC+ and its 11.5% senior notes due December 2017 to D from CCC+. According to Standard & Poor’s, the downgrades follow American Media’s announcement that it has completed an exchange of $58.9 million of its existing 11.5% first-lien senior secured notes due 2017 for $78 million 7% senior secured second-lien notes due 2020. “We view the exchange as distressed (and tantamount to a default, based on our criteria), rather than purely opportunistic, given the challenging environment American Media operates in, the company’s meaningful upcoming debt maturities in 2017, and our view that the company could enter into a debt for equity exchange of its second-lien notes as a way to reduce debt leverage and address upcoming maturities,” said Standard & Poor’s credit analyst Scott Zari. “Additionally, we believe that investors received less than what was promised on the original securities.” Read more on distressed companies.
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