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MD America Energy, LLC Distressed Debt Exchange

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On July 5, 2016, S&P Global Ratings lowered its corporate credit rating on MD America Energy, LLC (MDAE) to SD from CCC and its term loan rating to D from CCC. “The downgrade reflects MDAE’s announcement that it is redeeming its term loan due 2019 at 94% to par with proceeds from an equity infusion from its parent company Meidu Energy Corp.,” said S&P Global Ratings credit analyst Christine Besset. “We view the transaction as distressed because debtholders will receive less than par, and because we believe that MDAE’s leverage was unsustainable given our expectation of deteriorating cash flow generation,” she added. According to S&P Global, its analysis will incorporate the absence of debt of the Company, while still taking into account the small size and scale of its asset base, the challenging operating environment and the likelihood of potential acquisitions and releveraging in the next 12 months. Read more on distressed companies.