Moody’s Investors Service announced it has downgraded its Probability of Default Rating for American Tire Distributors to D-PD from Ca-PD, following its Chapter 11 bankruptcy filing.
Moody’s also downgraded the company’s Corporate Family Rating (to Ca from Caa2 rating under review), and the rating for its senior secured term loan (to Caa2 from Caa1 rating under review). Moody’s affirmed the existing C rating for the company’s senior subordinated notes. The ratings outlook is stable.
“We have been expecting some form of requisite restructuring of American Tire’s debt obligations for some time,” noted Inna Bodeck, Moody’s lead analyst for the company. “While the bankruptcy filing will alleviate the
heavy debt burden related to the company’s existing subordinated notes, our downgrade of the term loan rating reflects our assessment that additional debt may ultimately need to be equitized,” added Bodeck.