S&P Downgrades Horsehead Holding (ZINC) to 'SD' Amid Missed Payment

Standard & Poor's Ratings Services said it lowered its corporate credit rating on Horsehead Holding Corp. (Nasdaq: ZINC) to 'SD' from 'CCC'.

Concurrently, we affirmed the 'CCC' issue-level rating on the company's senior secured notes. The recovery rating on the notes remains '4', which continue to reflect our expectation for average (30%-50%; lower end of the range) recovery in the event of a conventional default.

Horsehead Holding Corp. has elected to exercise the 30-day grace period under its indenture agreements with holders of its 3.80% convertible senior notes due 2017. This extends the time period the company has to make the approximately $1.9 million interest payment due Jan. 4, 2015 without triggering an event of default under the indentures.

The company has also entered into temporary forbearance agreements with its lenders related to certain events of default under its Macquarie and Zochem credit facilities while it explores solutions for its liquidity and capital structure issues.

"Given our view of the company's debt level as unsustainable, and ongoing restructuring discussions, we do not expect a payment to be made within the grace period. In accordance with our criteria, we are lowering the corporate credit rating to 'SD'," said Standard & Poor's credit analyst Ryan Gilmore. "If Horsehead makes the interest payment within the grace period, we will likely revise the issuer credit rating to 'CCC', otherwise we will revise all ratings accordingly."

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