S&P Fears Petroplus Insolvency
Standard and Poor’s Ratings Services today [Jan. 25] lowered its long-term corporate credit rating on Switzerland-based refiner Petroplus Holdings AG to ‘D’ [Default] from ‘CC’ and also downgraded to ‘D’ from ‘C’ its senior unsecured debt ratings on notes totaling $1.6 billion and a $150 million convertible bond issued by its Bermuda subsidiary, Petroplus Finance Ltd.
At the time of default, the recovery rating on these instruments was unchanged at ’5′, indicating the ratings agency’s expectation of modest — 10-30 percent — recovery prospects.
The move comes after Petroplus Holdings AG announced yesterday [Jan. 24] that its discussions with banks to reopen working capital facilities had been unsuccessful. Petroplus Holdings AG was one Europe’s largest independent oil refiner by capacity
The banks also issued a notice of acceleration under the company’s revolving credit facility, which constitutes an event of default under the senior notes and convertible bonds.
An S&P analyst said in a statement: “The downgrades reflect our understanding that Petroplus has received notices of acceleration from its banks under its $2.1 billion committed and uncommitted revolving credit facilities. Such acceleration constitutes an event of default under the $1.75 billion aggregate principal amount of outstanding senior notes and convertible bonds of Petroplus Finance.
“As Petroplus is unable to reopen its working capital lines, it has started to close down operations at its refineries. In addition, we understand that the board of directors plans to file for insolvency.”
