On April 18, 2017, S&P Global Ratings lowered its corporate credit rating on Mood Media Corporation to CC from CCC+ and its 9.25% senior unsecured notes to C from CCC-. “The downgrade follows Mood’s announcement that it has offered to exchange its 9.25% senior unsecured notes due 2020 for new 14% cash and paid-in-kind (PIK) (6% cash and 8% PIK) second-lien notes due 2024 for a reduced exchange value of $500 per $1,000 of par, plus new common equity shares,” said S&P Global Ratings credit analyst Khaled Lahlo. S&P Global views the exchange as a reduction in value to lenders, and in conjunction with the extension of the debt maturity by seven years and the view of the PIK interest component as a method of delaying payment, S&P sees the transaction as tantamount to a default based on its criteria.
On April 18, 2017, Moody’s Investors Service downgraded Mood Media Corporation’s probability of default rating to Caa3-PD from Caa2-PD. The Company’s Caa1 corporate family rating, B1 secured bank credit facility rating and Caa2 senior unsecured notes rating remain unchanged. According to Moody’s, the PDR downgrade results from Mood Media’s April 13, 2017 announcement that a private group led by GSO Capital Partners LP and Apollo Global Management LLC agreed to acquire all of Mood Media’s outstanding shares, exchange the $350 million unsecured notes at a significant discount to the face value with $175 million of new second-lien notes and new common shares and refinance the remaining outstanding debt with new secured debt. Read more on distressed companies.