NEW YORK, June 1 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has lowered the senior debt ratings of The Loewen Group, Inc. (Loewen) and related entities to 'DD' (Double-D) from 'CCC' (Triple-C), DCR's lowest rating prior to default. The downgrade follows the company's announcement today that it and approximately 870 U.S. subsidiaries have filed in Delaware to reorganize under Chapter 11 of the U.S bankruptcy Code. Loewen also announced that the group's 116 Canadian subsidiaries are applying today for creditor protection under the Companies' Creditor Arrangement Act in Canada. The group's ratings have been removed from Rating Watch--Down. Rated senior unsecured debt totaled approximately $1.65 billion at March 31, 1999. Including the rated securities, Loewen's consolidated senior debt amounted to $2.14 billion as of March 31, 1999, of which roughly $318 million was outstanding under bank credit facilities. Debt of the senior lending group, including the note holders and banks, is guaranteed on a pari passu basis by substantially all majority-controlled subsidiaries and supported by a pledge of shares of those entities. The debt securities affected by the rating action are:
The Loewen Group, Inc.'s senior guaranteed notes;
Loewen Group International Inc.'s (LGII) senior guaranteed notes; and
Loewen Pass-Through Asset Trust 1997-1's pass-through asset trust certificates (PATS).
In connection with the bankruptcy filings, Loewen reported that it has received a commitment for up to $200 million in debtor-in-possession financing from First Union National Bank. Loewen expects that the bank credit facility will provide the company with sufficient funding to cover working capital needs during the bankruptcy reorganization.
On March 22, 1999, Loewen's senior ratings were downgraded to 'CCC' (Triple-C) in recognition of continued concern with respect to the company's poor liquidity, troubled operating performance and efforts to sell assets and reduce debt. On April 2, 1999, DCR lowered the ratings of the preferred securities of Loewen and Loewen Group Capital, L.P. to 'DP' (preferred stock with dividend arrearages). That rating action followed the deferral of dividends on Cdn.$220 million of 6 percent cumulative redeemable convertible first preferred shares and on $75 million of cumulative monthly income preferred securities (MIPS), series 'A'.
Based in Burnaby, British Columbia, Loewen is the second-largest consolidator of funeral homes and cemeteries in North America, ranking behind Service Corp. International and ahead of Stewart Enterprises. LGII serves as the principal borrowing entity and holding company for all of Loewen's U.S. assets and operations. Approximately 90 percent of Loewen's revenues, generated by a portfolio of more than 1,100 funeral homes and 400 cemeteries, are accounted for by U.S. operations.
biz.yahoo.com
...received a commitment for up to $200 million in debtor-in-possession financing from First Union National Bank.
I see this as more dilution of stockholders. Is that 200 million going into general operations?
The creditors will want to sort this mess out sooner rather than later. The longer they wait the more the company slips into the mire. The debt must be converted to equity or the company will not function.
Those are my opinions have you any comments? How are your bonds looking?
Michael Bidder |
