12.09.2016, 20:51
S&P: Resolute Forest Products Inc. Senior Unsecured Notes Downgraded To ‘B+’ On New Credit Agreement; Recovery Rating To '5'
OREANDA-NEWS. Consistent with that of industry peers--of our projected emergence EBITDA. We estimate that, for Resolute to default, EBITDA would need to decline significantly, representing a material deterioration from the current state of its business. We assume that, in a hypothetical bankruptcy scenario, the company's US$600 million asset-based loan revolving credit facility is 60% drawn, the US$138.8 million cash flow revolver is 85% drawn, and the US$46.3 million term loan is fully drawn--all with a priority claim on the company's U. S. assets (estimated at 60% of Resolute's enterprise value). We estimate that just over US$80 million is available to senior unsecured claims (which primarily consist of the company's senior unsecured notes), and this represents the net value of Resolute's Canadian assets (after estimated unfunded pension and postretirement obligations in Canada, which we assume are senior to the unsecured notes (which are not guaranteed by Resolute's foreign subsidiaries). Simulated default assumptionsSimulated year of default: 2020EBITDA at emergence: US$180 millionEBITDA multiple: 5xSimplified waterfallNet enterprise value (after 5% administrative costs): US$855 millionValuation split in % (obligors/non-obligors): 60/40---------------------------------------------------------Priority claims at guarantor subsidiaries: US$548 millionUnsecured claims at nonguarantor subsidiaries: US$259 millionTotal value available to remaining unsecured claims: US$83 millionSenior unsecured debt and pari passu claims: US$764 million--Recovery expectations: 10%-30% (lower half of the range)Note: All debt amounts include six months of prepetition interest.
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