S&P: SanDisk Corp. 'BB+' Rating Affirmed And Then Withdrawn On The Company's Acquisition By Western Digital Corp.
We subsequently withdrew the corporate credit rating on SanDisk. We will continue to maintain issue-level ratings on SanDisk's remaining convertible notes. The recovery ratings remain '3', indicating our expectation of meaningful recovery (50%-70%; upper half of the range) in the event of a payment default.
These actions follow the closing of the merger between Western Digital and SanDisk. The surviving entity is Western Digital Corp. "As a result, we expect to maintain ratings on the modest remaining stub principal of the legacy SanDisk senior convertible notes totaling about $37 million," said S&P Global Ratings' credit analyst Jenny Chang. "We do not expect these legacy notes to benefit from parental guarantees, but we expect good residual value available to the senior noteholders given its position in the capital structure." However, recovery value of unsecured debt issues by companies rated 'BB-' or higher are generally capped at '3' to account for the greater risk of recovery prospects being impaired due to incremental debt issuance prior to default.