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Investing.com -- S&P Global Ratings has downgraded the credit rating of Mountain Province Diamonds Inc (OTC:MPVDF). (MPV), a Canada-based company. The issuer credit rating (ICR) was lowered from ’ CCC (WA:CCCP)’ to ’SD’ (selective default) due to a distressed debt restructuring. The company’s second-lien notes due in December 2025 were also downgraded from ’B-’ to ’D’.
The changes are due to MPV amending the terms of its senior secured second-lien notes. The maturity of these notes has been extended from December 2025 to December 2027, and the notes’ security ranking has been subordinated. According to S&P Global Ratings, these modifications are considered a distressed debt restructuring and equivalent to a default under their rating methodology.
The downgrade reflects the company’s minimal liquidity and noteholders receiving less than originally promised. The change in the terms of the notes is part of a larger refinancing transaction that introduces a new term loan of up to $40 million and a new working capital facility of C$33 million. These new financial instruments rank ahead of the notes.
The company’s joint venture partner, De Beers Canada Inc., will also have a first-ranking security interest in the company’s asset for MPV’s share of the decommissioning obligations (C$60 million) at the Gahcho Kue mine.
The debt restructuring is viewed as a distressed transaction and default since investors received less than originally promised on the notes. S&P Global Ratings plans to reassess the ICR on MPV in the near future, focusing on the long-term viability of MPV’s capital structure and liquidity position.
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