Standard & Poor's Rating Services has cut its credit rating on Philadelphia's Please Touch Museum by two notches to D -- its lowest rating, reserved for borrowers who have defaulted on their committments -- from last year's CC, or 'highly vulnerable', after bondholders on June 10 demanded the museum refund "all principal and interest" on $58 million in bonds used to build its underused Fairmount Park facility. The museum had hoped to get the bondholders to accept lower payments.
After missing a bond payment last fall in a failed attempt to convince bondholders to accept less, the museum has $1.8 million in its debt service reserve, $3.6 million in a collateral fund and $11 million in cash and marketable investments -- more than enough to cover the $2.16 million principal and interest payment due Aug. 1, but not nearly enough to cover the $58 million in principal that it owes bondholders, analyst Nick N. Waugh wrote in a report to S&P clients. Including interest, the museum owes over $100 million.
A museum spokeswoman did not immediately respond to a call and email seeking comment.