Vertellus Specialties Inc. -- Moody's moves Vertellus' PDR to Ca-PD/LD following expiration of grace period for missed interest payment, CFR downgraded to Ca

New York, April 13, 2016 -- Moody's Investors Service, ("Moody's") appended Vertellus Specialties Inc.'s Probability of Default Rating to Ca--PD/LD from Caa3-PD, following the expiration of its grace period for a missed interest payment. Adding the /LD (limited default) indicator results from Vertellus' missed interest payment for the first quarter of 2016 and from the understanding that the company is working to obtain a forbearance agreement from lenders. Moody's expects that an agreement would provide forbearance against certain events of default for a period of 45 days or more in order for Vertellus to determine various restructuring alternatives that would result in a viable path forward. The LD indicator will remain in place until there is a resolution to the missed interest payment. The downgrade of Vertellus' Corporate Family Rating to Ca results from its decision to miss the first quarter interest payment on the term loan, the compromised earnings in the VAN business, the prospect for significantly increased environmental liabilities, that covenant non-compliance will persist through 2016, expectations for going concern language in its 2015 audited financial statements, and that the capital structure is unsustainable. The rating on Vertellus' $455 million senior secured first lien term loan due 2019 was downgraded to C from Ca, given Moody's view that significant term loan impairment is likely. Vertellus also has an unrated $100 million ABL revolver due 2019 which is believed to be in a preferential security position to the term loan. The rating outlook was revised to stable from negative.

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