Watching and waiting

Ineos is in focus again, after ratings agency S&P cut the long-term corporate rating on the chemicals group to CCC from B–, with a negative outlook. The rating agency said the downgrade reflected liquidity pressure and the continued uncertainty about the impact of negotiations with creditors.

The cost of CDS protection for Ineos bonds has spiralled to more than 85% upfront, making it the most expensive protection for a European credit.

S&P warned it could cut the rating further if Ineos failed to agree a new loan agreement with lenders by the time its current six-month covenant holiday expired at the end of June. A failure to agree terms with lenders would open up the prospect of a default and balance sheet restructuring. Earlier this month sector peer LyondellBasell filed for Chapter 11 protection from creditors.

In mid-December Ineos secured the approval of lenders for a request to waive most of its senior loan covenants for the first half of 2009, in a move aimed at allowing management time to produce a new business plan and to reset its loan covenants.

The downgrade comes despite a move by Ineos to boost market confidence on January 21, when it issued a statement saying its net debt to Ebitda was in line with banking covenants at the end of 2008, and stating that it had cash balances at year-end of €650m, and undrawn revolving credit facilities of €200m.

Four Seasons Health Care Group has entered into another standstill agreement with senior lenders, until July 22 this year, in a continued effort to allow time to pursue a consensual restructuring of the group’s debt.

Four Seasons said it had tabled a restructuring proposal, though agreement would be made contentious by the mix of creditors holding parts of the 11 separate tranches of debt that backed a £1.4bn LBO in 2006. The buyout was led by financial sponsor Three Delta, in turn backed by Qatar Investment Authority. QIA has since walked away from the business, after seeing its £100m equity investment wiped out.

Despite the apparent simplicity of easing out equity investors, the mix of lenders and the complexity of the capital structure make securing a consensual agreement particularly slow going, as various levels of debt investors jockey for position.

Four Seasons is the UK’s third-largest care home operator. It has an outstanding debt package of about £1.5bn, which has been strangling the company over the course of 2008. Preliminary results for the year ended December 31 2008 show that Ebitda for the year will have increased to more than £100m.

In September, a £900m refinancing deal put forward by RBS was rejected by the other creditors.

The new standstill agreement has been signed on the same terms as the existing deal, which has been in effect from November until January 22, and followed an earlier agreement in September.

Listed UK tool and equipment hire company Speedy Hire said it expected turnover for 2009 to be flat, setting it on course to potentially breach loan covenants on the £325m debt package the group put in place to run for five years from June 2007.

The company said it had commenced with a process to agree new “appropriate” covenants for the remainder of the tenor of the facility, which expires in June 2012.

In June 2007 Speedy Hire secured a £325m loan to support its acquisition of Hewden Tools from Hewden Stuart for £115m, through MLAs Barclays and RBS. The five-year deal increased and replaced an existing £120m loan signed in 2004.

AIM-listed UK housebuilder Oakdene Homes has been taken into administration, after failing to agree a consensual restructuring with lenders. On Friday Oakdene said that Colin Haig, Mark Shires and Karen Dukes, of PricewaterhouseCoopers had been appointed as administrators by RBS.

The move comes after lenders served notice on the company to repay the outstanding facilities. Oakdene has liabilities of £90m, according to Thomson Reuters data.

Earlier, shares in the housebuilder were suspended. The builder had breached banking covenants at the end of September last year, and has since relied on a temporary facility while discussions with lenders were ongoing.