Cerberus-controlled DynCorp International on September 12 joined LCD's Restructuring Watchlist. The list serves to track companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisers or entered into creditor negotiations.
The last month has been a rough one for DynCorp. On August 8, the defense contractor dismissed its new CEO after just three weeks on the job, owing to accounting problems that were disclosed at his prior employer, L-3 Communications. Later in the month, press reports out of the nation’s capital circulated with details of lost contracts to competitors. Following filing of company’s disappointing 2Q results, DynCorp saw its bonds trade at a record low of 84.
On August 15, Moody’s downgraded the company from B2 to B3, its loan cut from Ba2 to Ba3. This followed S&P’s downgrade earlier in the summer, corporate and loans lowered to B+ from BB-; bonds cut to CCC+ from B3. S&P credit analyst Chris Mooney said at the time: "credit protection measures have deteriorated more than we expected due to challenging market conditions despite meaningful debt reduction."
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Contact Marc Auerbach for questions on the Watchlist or LCD Research.
LCD’s Restructuring Watchlist as of Sept. 12, 2014: