S&P: Highland on developing watch

Standard & Poor's said it placed the B long-term corporate credit rating on Highland Group Holdings Ltd. (House of Fraser) on CreditWatch with developing implications.

The agency also said it placed the B rating on the £250 million senior secured notes due 2018 issued by House of Fraser (Funding) plc on CreditWatch with developing implications.

The recovery rating on these notes remains unchanged at 4.

The CreditWatch placements reflect the uncertainties surrounding House of Fraser's future capital structure, governance, financial policies and business strategy following the April 14 announcement that Nanjing Xinjiekou Department Store Co. Ltd. has signed a definitive agreement to acquire an 89%-shareholding of House of Fraser, S&P said.

The proposed transaction is due to close within the next four months and values House of Fraser at £480 million, the agency said.

"We believe that the effects of the proposed takeover on House of Fraser's business and financial risk profiles remain uncertain," said Tim Wells, an S&P analyst.

It is possible that Nanjing Xinjiekou will look to expand the House of Fraser business into new markets such as China and the Middle East, Wells said in a press release.

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