Moody's upgrades J. Crew

Moody's Investors Service said it upgraded J. Crew Group Inc.'s senior discount notes and issuer rating to Caa2 from Ca, affirmed the senior implied rating of B3 and changed the outlook to stable from negative.

The upgrade of the senior notes and the change in outlook reflect the stabilization of J. Crew's business as a result of improved operating performance and its recapitalization in December and January, Moody's said.

At the end of December, J. Crew borrowed $275 million in term loans under a senior subordinated loan agreement with entities managed by Black Canyon and entered into a new $170 million asset-based revolving credit facility due in 2009 led by Wachovia. The proceeds from the notes were used to redeem in full the company's 10 3/8% senior subordinated notes due 2007 and in part its 16% senior discount notes due 2008.

In January, the company redeemed the remaining outstanding 16% senior discount notes with internally generated cash flow. The Black Canyon term loans were subsequently converted to 9¾% senior subordinated notes due 2014, which are unrated.

These recapitalization transactions extended the maturities, reduced the principal due at maturity (the 16% senior discount notes were accretive), and lowered the company's interest expense.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.