Analysts at Moody’s Investors Service has downgraded the Corporate Family Rating (CFR) Broadview Networks Holding Inc from Caa2 to Caa3 and the probability of Default Rating (PDR) from Caa3 to Ca. The outlook on the ratings has been changed from negative to stable.
In a research note published on June 19, the analysts state that the Caa3 CFR indicates the high likelihood and near term default and Moody’s expectation for a higher than average recovery rate for the debt capitalization at default.
The CFR and PDR rating indicates the company’s announcement that it has entered into a restructuring support agreement with holders of around 70 percent of its preferred stock and around 66 percent of its unsecured notes.
The company is expected to file a pre-packaged Chapter 11 Plan of Reorganization or complete an out of court exchange offer. Broadview’s $300 million 11.375% senior secured notes have been downgraded from Caa2 to Ca.
The proposed restructuring would exchange the existing $300 million notes for $150 million of new five year senior secured notes and 97.5% of the primary equity of the company. The remaining 2.5% of primary equity would go to the company’s existing preferred shareholders and the warrants to purchase additional shares, the analysts say.