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Moody's may cut Genesco
Moody's Investors Service said it placed the ratings of Genesco Inc. on review for possible downgrade following the announcement by Foot Locker that it had made an unsolicited proposal to purchase all of the outstanding shares of Genesco for $46.00 per share cash representing a total consideration of $1.2 billion.
The following ratings are placed on review for possible downgrade: corporate family rating of Ba3, probability of default rating of Ba3 and convertible senior subordinated debentures of B1.
The convertible senior subordinated notes current LGD assessment of LGD4-68% is subject to change as a result of the review for possible downgrade, the agency said.
Moody's added that the review is prompted by the high likelihood that the acquisition, if successful, will be predominantly financed with debt and will result in a sizable increase in the combined company's leverage and a corresponding weakening in credit metrics.
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