Research Update: Pfleiderer Group B.V.&Co. KG Downgraded To 'SD' (Selective Default) On Debt Restructuring

Germany-based wood panel manufacturer Pfleiderer Group B.V.&Co. KG received near-unanimous consent for its capital restructuring, which included a three-year extension of the maturity of its €750 million senior secured notes (SSNs) in return for a €75 million equity injection by Strategic Value Partners and additional compensations for noteholders. We view this transaction as distressed and think that Pfleiderer would likely have faced a conventional default in the short to medium term in absence of this transaction. Furthermore, the compensation offered to noteholders and the equity injection is not viewed as adequate compensation, because it ultimately does not address Pfleiderer's insufficient cash generation capacity, given the group's high debt levels. Consequently, we lowered our long-term issuer credit rating on

...- Germany-based wood panel manufacturer Pfleiderer Group B.V. & Co. KG received near-unanimous consent for its capital restructuring, which included a three-year extension of the maturity of its 750 million senior secured notes (SSNs) in return for a 75 million equity injection by Strategic Value Partners and additional compensations for noteholders. - We view this transaction as distressed and think that Pfleiderer would likely have faced a conventional default in the short to medium term in absence of this transaction. Furthermore, the compensation offered to noteholders and the equity injection is not viewed as adequate compensation, because it ultimately does not address Pfleiderer's insufficient cash generation capacity, given the group's high debt levels. - Consequently, we lowered our long-term issuer credit rating on Pfleiderer to '##' (selective default) from '##' and our issue credit rating on its 750 million senior secured notes to 'D' from '##'....

Research Update