J.G.WENTWORTH CREDIT RATINGS WITHDRAWN BY S&P

The Standard & Poor rating services have currently announced the withdrawal of counterparty credit and senior secured debt by J.G. Wentworth at their request. This announcement came in March 2009, especially after announcement by Wentworth that Deutsche Bank extended its “Standstill” agreement but before Wentworth’s March 31 deadline to pay approximately $ 6 million as quarterly interest on segregated corporate debt.

This standstill agreement relates to an unpaid earlier $ 16.9 million margin call on the credit line of Wentworth’s warehouse credit with Deutsche bank, used by Wentworth to purchase structured settlements.

Industry sources inform S2KM:-

• Subsequently, Wentworth missed the March 31 midnight deadline for paying the $ 6 million interest on general corporate debt although there exists a thirty day grace period.
• By announcing its own removal from S&P ratings, Wentworth helped prevent probable additional credit downgrade.
• The general $ 325 million corporate bonds are simply worthless and trading currently for pennies on dollar.
• Though the chief executive position is still retained by David Miller, an outside consultant for advice on debt-restructuring has been hired by Wentworth.
• The structured settlement asset-related securities issued already by Wentworth are separate legally from Wentworth and hence, they are not directly impacted by Wentworth’s corporate financial problems.

Announcement by Standard & Poor:-

In March 31, 2009, the Standard & Poor ratings services removed the ratings on the J.G. Wentworth LLC from CreditWatch, where they got placed with a negative implication on March 17, 2009. At around the same time, Wentworth’s senior secured ratings and CC counterplay credit ratings were assigned negative outlook. These subsequently got withdrawn at the company’s request.

This rating action follows an announcement call given by Wentworth that it received a Deutsche Bank extension in relation to waiver of $ 16.9 million margin call. This standstill agreement extension allows Wentworth to fund its business till April 22, without any further margin calls. Subsequent to the waiver expiry, the warehouse lender may have provided a notice of default, causing a cross-default on other Wentworth debts, including senior secured bank loan. In addition, Wentworth’s ability to continue operations is completely limited without economic assistance from JLL partners – private equity owners.

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