S&P: Hudson’s Bay on watch

Standard & Poor’s said it placed its B+ long-term corporate credit rating and all issue-level ratings on Hudson’s Bay Co. on CreditWatch with negative implications after the company announced an agreement to acquire Germany’s Kaufhof and Belgium’s Inno department store chains from Metro AG for C$3.4 billion.

The company plans to finance the acquisition with a US$3.25 billion term loan B, although proceeds from an anticipated real estate monetization will likely fund a significant portion of the acquisition.

“The CreditWatch placement reflects our opinion that this transaction will weaken HBC’s financial risk profile by increasing fully adjusted debt leverage, although the company’s asset coverage remains solid as demonstrated by the proposed real estate monetization and the joint ventures’ potential equity issuance,” said S&P credit analyst Donald Marleau in a news release.

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