Victoria PLC downgraded to ’CCC-’ amid distressed debt exchange proposal

Investing.com -- S&P Global Ratings has downgraded Victoria PLC to ’CCC-’ from a previous rating and placed it on CreditWatch with negative implications following the company’s proposed debt exchange offer.

The rating agency considers Victoria’s exchange offer as distressed, stating that if implemented, nonparticipating and nonconsenting noteholders would likely receive less than originally promised.

The downgrade follows Victoria’s announcement that it has secured transaction support agreements with noteholders representing over 90% of its €489 million senior secured notes due August 2026. This accounts for more than 77% of the 2026 notes and €250 million senior secured notes maturing March 2028, when combined as a single debenture.

Under the proposed agreement, consenting holders would exchange their 2026 notes and a portion of 2028 notes for new first-priority senior secured notes. These new notes would carry a 9.875% annual interest rate, with an option in the first year for payment-in-kind interest of 8.875% plus 1% cash interest, maturing in 2029.

Victoria has also launched a consent solicitation asking eligible holders of existing notes to approve amendments to the current indenture and enter into a subordination agreement that would establish payment priority for new noteholders.

As of Wednesday, Victoria has received valid consent from approximately 78% of the 2026 and 2028 noteholders, allowing the company to execute a supplemental indenture to implement the amendments once certain conditions are met.

Additionally, Victoria is seeking consent from 2026 noteholders to reduce cash interest from 3.625% to 1% and extend the maturity date to 2031, alongside an offer to exchange into the new first-priority notes at par.

S&P views this transaction as distressed because it would alter the ranking of nonparticipating and nonconsenting noteholders to a more junior position without adequate compensation, which the agency considers "tantamount to a default."

The CreditWatch negative placement indicates that S&P expects to further downgrade Victoria to ’SD’ (selective default) upon confirmation of the transaction’s closing. After implementation, S&P will review the rating, the company’s new capital structure, and its liquidity position.

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