S&P: Cloud Peak Energy Resources LLC's Proposed Notes Rated 'B-'; CCR Lowered To 'SD' On Distressed Exchange
At the same time, we lowered the issue-level rating on Cloud Peak's $300 million senior unsecured notes due 2019 and its $200 million senior unsecured notes due 2024 to 'D' from 'B+'. We revised the recovery rating on the senior unsecured notes to '6' from '4', reflecting our expectation of negligible (0% to 10%) recovery in the event of a conventional default.
We assigned a 'B-' issue level rating on the proposed second-lien notes due 2021 with a '3' recovery rating, reflecting our expectation of meaningful (50% to 70%, upper half of the range) recovery in the event of a conventional default.
"The rating action is a result of a below-par exchange offer of the senior unsecured notes," said S&P Global Ratings analyst Vania Dimova. "In addition, we believe the deterioration in operating performance and diminished liquidity over the past several quarters offer additional uncertainly over the company's ability to generate positive free operating cash flow in the forecast period."
Once the exchange is complete, S&P Global Ratings will assign a corporate credit rating and outlook that reflects the new capital structure.