S&P lowers Constellis rating, says debt restructuring plan due next month

S&P Global Ratings said today it has lowered the credit rating of Constellis Holdings after the company "failed to make a mandatory principal payment on its $872 million first-lien term loan."

In a rationale provided for its action, S&P said Constellis defaulted on Dec. 31 when it didn't make a mandatory $2 million quarterly principal payment.

"We view this action as a selective default, given our previous expectation that Constellis would miss its next principal or interest payment as part of the plan laid out when the company entered into its new $110 million priority first-lien term loan," S&P added. "There is no change to our issue-level ratings or recovery ratings on the other, unaffected credit facilities including the new priority term loan and the $215 million second-lien term loan."

S&P wrote that Constellis' new credit facility "requires that Constellis present a debt restructuring plan by Feb. 4, 2020, likely resulting in a transaction that we would view as a distressed exchange or a prepackaged bankruptcy filing."

Constellis was created by combining some assets of Blackwater with other companies, including Triple Canopy and Centerra Group.

In a statement today, the company said it "recently closed on a $110 million delayed-draw credit facility provided by a subset of its existing lenders."

"We appreciate the continued support our lenders expressed through this new financing," Constellis continued. "As part of this financing process, we have entered into a forbearance agreement, which provides additional time and flexibility to continue discussions around de-levering and recapitalizing our balance sheet."

Constellis added that it "plans to continue to operate our business, execute our business strategy and meet our obligations to our stakeholders."