Preferred Proppants LLC Downgraded To 'D' Following Restructuring; Ratings Subsequently Withdrawn

  • U.S.-based hydraulic fracturing (frac) sand producer Preferred Proppants LLC (PPL) completed a broad restructuring. PPL will retain its legacy assets and has spun off the in-basin sand operations as a separate company, Signal Peak Silica LLC (Signal Peak).
  • PPL's first-lien term loan due 2020 was cancelled and holders received 100% of the equity in the new restructured company.
  • We view this exchange as a default because we consider the transaction to be distressed and the issuer did not fulfill its obligation as promised.
  • Therefore, we lowered the issue-level rating on the company's $425 million secured term loan to 'D' from 'CCC'.
  • We also lowered the issuer credit rating on PPL to 'D' from 'CCC+'.
  • Subsequently, we withdrew all ratings on Preferred Proppants LLC.
NEW YORK (S&P Global Ratings) May 9, 2019—S&P Global Ratings today took the 
rating actions listed above.  The downgrade follows PPL's restructuring and 
recapitalization. PPL will retain its legacy assets consisting principally of 
its Sanders, Arizona mine, its Genoa, Nebraska mine and its West Texas resin 
coating facility. The company's (unrated) asset-based lending facility due 
2019 was decreased to $30 million from $50 million and its first-lien term 
loan due 2020 was cancelled with holders' receiving 100% of the equity in the 
new restructured company. PPL's (unrated) $300 million second-lien term loan 
due 2021 was also cancelled, with no recovery for investors.

We subsequently withdrew all ratings on PPL.
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