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Moody’s Downgrades ATD’s Probability of Default Rating

Moody’s Investors Service downgraded ATD’s Probability of Default Rating (PDR) following the company’s announcement that it had initiated Chapter 11 bankruptcy proceedings.

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Moody’s Investors Service downgraded its Probability of Default Rating (PDR) for American Tire Distributors, Inc. to D-PD from Ca-PD, following the company’s announcement that it had initiated Chapter 11 bankruptcy proceedings.

Moody’s also downgraded the company’s corporate family rating (to Ca from Caa2 rating under review), and the rating for its senior secured term loan (to Caa2 from Caa1 rating under review). Moody’s affirmed the existing C rating for the company’s senior subordinated notes. The rating outlook is stable, according to Moody’s.

Corporate families rated D-PD are in default on all of their long-term debt obligations.

“We have been expecting some form of requisite restructuring of American Tire’s debt obligations for some time,” noted Inna Bodeck, Moody’s lead analyst for ATDI. “While the bankruptcy filing will alleviate the heavy debt burden related to the company’s existing subordinated notes, our downgrade of the term loan rating reflects our assessment that additional debt may ultimately need to be equitized.”

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