Research Update: Garfunkelux Holdco 2 (Lowell) Downgraded To 'CC' From 'CCC+' On Proposed Debt Restructuring; Outlook Negative

On Dec. 20, 2024, Garfunkelux Holdco 2 S.A. (Lowell) proposed a restructuring of its outstanding debt, including the senior secured notes (SSNs). In our view, the company's proposal to exchange the existing SSNs for new bonds that have a three-year maturity extension as well as a new issue that has a payment-in-kind (PIK) coupon would be tantamount to default once executed. We consider the proposed restructuring to be distressed, and anticipate that noteholders would receive less than was promised in the documentation for the original SSNs. Therefore, we lowered to 'CC' from 'CCC+' our long-term issuer credit rating on Lowell and our issue credit rating on its SSNs. We affirmed our short-term rating on Lowell at 'C'. The negative outlook

...- On Dec. 20, 2024, Garfunkelux Holdco 2 S.A. (Lowell) proposed a restructuring of its outstanding debt, including the senior secured notes (SSNs). - In our view, the company's proposal to exchange the existing SSNs for new bonds that have a three-year maturity extension as well as a new issue that has a payment-in-kind (PIK) coupon would be tantamount to default once executed. We consider the proposed restructuring to be distressed, and anticipate that noteholders would receive less than was promised in the documentation for the original SSNs. - Therefore, we lowered to '##' from '###+' our long-term issuer credit rating on Lowell and our issue credit rating on its SSNs. We affirmed our short-term rating on Lowell at 'C'. - The negative outlook indicates that we will lower our issuer credit ratings on the company to '##' (selective default) and on its SSNs to 'D' (default), upon completion and implementation of the proposed transaction....

Research Update