S&P puts Hudson’s Bay ratings on negative watch

S&P said it placed Hudson’s Bay Co.’s B issuer credit rating on the company on CreditWatch with negative implications.

The agency cited the company’s decision to go private and the reorganization charges for the placement.

“Our rating action incorporates HBC’s expected cash outflow resulting from dead rent obligations and reorganization (about C$715 million net of cash distributions from real estate JV) over the next three years that will likely lead to additional cash calls on the company. At the same time, the company’s definitive agreement with a group of HBC majority shareholders (collectively owning about 57%) to purchase the minority equity interest for about C$1 billion, funded with existing cash on the balance sheet and additional debt, will materially reduce funds available to support the company’s turnaround,” said S&P in a press release.

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