S&P rates Edcon

Standard & Poor's said it assigned a B issue rating to the proposed senior secured notes to be issued by Edcon (Proprietary) Ltd., the subsidiary of Edcon Holdings (Proprietary) Ltd.

The agency also said it assigned a recovery rating of 2 to the proposed notes, indicating 70% to 90% recovery in a default.

The agency also said it affirmed the rating on the existing €1.18 billion senior secured notes due 2014 at B. The recovery rating on these notes is unchanged at 2.

S&P said it affirmed the issue rating on the senior unsecured notes due 2015 at CCC with the recovery rating unchanged at 6, indicating 0% to 10% recovery.

The ratings reflect a view that there will be no material increase in liabilities under the new capital structure, as the proceeds from the proposed notes will be used to pay an estimated €500 million in mark-to-market liabilities relating to the hedging on the existing euro-denominated notes, the agency said.

The proposed issuance coincides with a modest increase in the facilities ranked senior to the proposed and existing senior secured notes, S&P said.

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