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Lupatech Cut to Selective Default by S&P After Missing Payment

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April 24 (Bloomberg) -- Lupatech SA, Brazil’s largest oil-services company, had its corporate rating lowered to SD, or selective default, from B- by Standard & Poor’s after the company failed to pay the annual interest on its 320 million real-local bonds.

The Caxias do Sul, Brazil-based company was also lowered to SD from brBB in S&P’s national scale, the ratings company said in an e-mailed statement yesterday. S&P affirmed a CCC issue rating on Lupatech Finance Ltd.’s guaranteed perpetual bonds.

The change in rating is due to “internal criteria at S&P that are totally different from the bonds issuance terms”, Lupatech said in a regulatory filing yesterday. “There was no default event that can generate an anticipated maturity to these bonds.”

The downgrade “follows the company’s postponement of the annual interest payment on its second private issuance of convertible debentures due last April 15,” S&P said in its statement. “Even though the indenture of the notes gives the company 30 days to remedy the non-payment, Standard & Poor´s views this incident as a default if payments are not settled within five business days after the due to provide consistent application of the rating definitions.”

Annual interest payments on the notes were due April 15 and the company is seeking to postpone the payments in 120 days, Lupatech said in an e-mailed statement on April 13. The company said it also seeks a waiver on debt covenants of the bonds.

To contact the reporter on this story: Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net

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