S&P cuts G+G Retail ratings to CCC

Standard & Poor's said it lowered its ratings on G+G Retail Inc., including the company's corporate credit and senior unsecured debt to CCC from B. The bank loan rating was cut to CCC from BB-.

The outlook is negative.

S&P said the downgrade reflects inadequate cash flow to service interest and G+G's disclosure in its 10-Q filing with the Securities and Exchange Commission that it is under discussions with its bondholders to restructure its $107 million 11% senior notes due 2006.

G+G may restructure its debt without offering payment that comes close to matching the original terms. Even if bondholders voluntarily accept such a negotiated offer, S&P said it would treat this as a default even though no legal default would occur.

S&P said G+G's operating performance has been very weak with a sharp decline in same-store sales of 13.8% for the nine months ended Nov. 1. A significant decline in average selling price, increased markdowns to clear inventory, and a poorly received merchandising mix contributed to the company's poor operating performance.

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