(Bloomberg) -- S&P Global Ratings has downgraded Adler Group to ‘CCC-’ from ‘CCC+’ after the embattled landlord signed a non-binding agreement with bondholders on restructuring its debt.

The agency also downgraded the Germany-headquartered firm’s unit Adler Real Estate and the group’s second-lien secured debt maturing in 2025 and 2026.

The company has not detailed its plans to achieve the proposed debt restructuring and large asset disposals “remain challenging,” S&P analysts led by Nicole Reinhardt wrote in a statement to the exchanges. 

“We believe the anticipated debt transactions over the coming months will likely materialize in the form of a distressed debt restructuring, which we could see as tantamount to a default under our criteria,” the agency added.

Adler reached an agreement in principle with some bondholders on an overhaul of its debt load that will hand them majority voting control, it said on April 25.

“Although Adler’s short-term debt remains manageable, in our view, its capital structure is currently unsustainable, with 70% of its total debt (about €4.5 billion) due by the end of 2026,” S&P said in the statement.

The ratings agency’s negative outlook on the landlord reflects its view that “there is a high likelihood that Adler will complete a distressed debt restructuring over the next six months.”

“We could lower the ratings if an agreement with lenders to undertake a debt restructuring is reached that we classify as a distressed exchange, without adequate compensation to lenders,” S&P said.

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