OREANDA-NEWS. S&P Global Ratings said today it lowered its corporate credit rating on American Gilsonite Co. to 'SD' from 'CCC-'.

We also lowered our issue-level rating on the company's senior secured notes to 'D' from 'CCC-'. The '4' recovery rating is unchanged, indicating our expectation for average recovery (30%-50%; upper half of the range) of principal in the event of a payment default.

The rating action follows American Gilsonite's election to not make an interest payment on its senior secured notes and to enter into a 30-day grace period while it continues to negotiate a debt restructuring with its lenders.

"Technically, a payment default has not yet occurred under the indenture governing the notes, which provides a 30-day grace period," said S&P Global Ratings credit analyst Ryan Gilmore. "However, we believe there is a high likelihood that the company will not make the interest payment in full within the stated grace period given that the company is in negotiations with lenders to restructure this debt."

The company has an unrated $25 million revolving credit facility due in May 2017, which had approximately $20 million outstanding as of June 31, 2016.

For a recovery analysis, refer to the American Gilsonite Research Update dated Aug. 31, 2016 currently published on RatingsDirect. (See the link below under Related Research)