S&P Lowers Quality Distribution Ratings

Standard & Poor`s Ratings Services lowered corporate credit ratings on Quality Distribution to 'CC' from 'B-' on Tuesday. S&P placed the ratings on CreditWatch with negative implications.

The move was based on Quality’s 8K filing on Aug. 31, announcing a restructured debt arrangement. Once the tanker truck operator completes its planned exchange of outstanding notes for new 10 percent senior notes due in 2013, S&P said it will lower the corporate credit rating further to ‘SD” (selective default) and will lower ratings on issues repurchased under the exchange offer to 'D' (default).

S&P also lowered its corporate credit rating Tuesday on subsidiary Quality Distribution LLC's senior unsecured and subordinated debt issues to 'C' from 'CCC+'. The recovery ratings on the senior unsecured and subordinated debt remain at '5' and '6', respectively. All the issue-level ratings are on CreditWatch with negative implications.

Quality lost $186.2 million in its second quarter as transportation revenue, minus fuel surcharges, fell 26 percent from the same quarter a year ago. Cash holdings fell by more than half in the first half of the year to less than $3 million.