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Moody's: Genesco on downgrade review
Moody's Investors Service said it placed the ratings of Genesco Inc. on review for possible downgrade following the announcement that the company plans to acquire Hat World.
Ratings placed under review for possible downgrade include the senior implied rating at Ba3, the issuer rating at Ba3, and the convertible subordinated debentures at B2.
Moody's noted that Hat World will diversify Genesco's sales base, enhance the consolidated company's accessories offerings and appeal to the same target customers as some of Genesco's existing businesses.
However, about 70% of the $165 million purchase price will be debt-financed, increasing Genesco's leverage materially in the near term. Both synergies and cross-marketing opportunities may be limited, the agency said.
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