Moody's cuts SVP-Singer

Moody's Investors Service said it downgraded SVP-Singer Holdings Inc.'s ratings including its corporate family rating to Caa2 from B3, its probability of default rating to Caa2-PD from B3-PD, and the rating on the company's $370 million original principal amount senior secured first-lien term loan due 2028 to Caa2 from B3.

The lower rating reflects the erosion in SVP-Singer’s profitability and the higher of risk of default at the current earnings level and ongoing cash flow deficits, the agency said.

Moody’s noted that in the third quarter of fiscal year 2022 SVP-Singer reported year-over-year revenue declining by 24.2% and company-adjusted EBITDA declining by more than 50%.

Lower replenishment orders in the retail channel, weakening consumer demand, and unfavorable foreign exchange hurt the company’s operating results, Moody’s said.

“Moody's now projects the company's revenue to decline by over 30% and EBITDA to decline by about two-thirds in fiscal 2022, with debt/EBITDA leverage increasing to over 13x. As a result, Moody's views SVP-Singer's capital structure as unsustainable absent a meaningful improvement of operating results in 2023,” the agency said in a press release.

The outlook is negative.

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