S&P Cuts Peach Holdings Ratings

By staff Writer

July 31, 2009 at 08:00 PM

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Standard and Poor's announced it has downgraded its rating on Peach Holdings Inc. to CC From B.

Under S&P's ranking system, a CC rating for a company's debt obligation is considered "highly vulnerable."

The rating agency also announced it is keeping the company on credit watch negative, meaning it believes the quality of the firm's debt has declined and may be lowered.

Peach Holdings offers a variety of settlement products and services through subsidiaries, including life settlements, structured legal settlements and annuity payments.

According to S&P, part of McGraw-Hill Inc., New York, Peach is working toward buying back part of an outstanding term loan at a significant discount.

"In line with our criteria, we would consider such a repurchase as a distressed debt repurchase," S&P said in a report.

If Peach is unable to buy back the debt, the company "could be in violation of its leverage covenant within the next several quarters," says S&P.

The agency said it believes Peach is likely to complete its debt repurchase but that this would depend on the company's ability to close a $100 million deal for the purchase of life settlement contracts.

"If Peach is unable to close on a new facility for its life settlements business, we believe the company could suffer from severe liquidity constraints in the near term," S&P stated.

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