| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers K > Headlines for KinderCare Learning Centers Inc. > News item |
S&P: KinderCare on negative watch
Standard & Poor's said it placed its ratings on KinderCare Learning Center Inc. on CreditWatch with negative implications. This includes the company's B+ corporate credit rating, its B+ senior secured rating and its B- subordinated debt rating.
S&P said the CreditWatch placement follows KinderCare's recent S-1 filing to register income deposit securities (IDS), which comprise class A common stock and senior subordinated notes due in 2014. KinderCare is also expected to issue class B common stock and additional senior subordinated notes independent of the IDS.
In connection with this offering, KinderCare is expected to tender for all of its $179 million outstanding 9.5% senior subordinated notes due in 2009 and offer its existing equity holders cash, income deposit securities, or class B common stock.
Based on a preliminary review, S&P believes that the IDS structure exhibits a more aggressive financial policy for KinderCare. In addition to an expected high dividend payout rate to the IDS holders, KinderCare could have significantly more debt after the transaction.
The proceeds will be used to repay current security owners, including financial sponsor KKR-KLC LLC, an affiliate of Kohlberg Kravis Roberts & Co. LP. Furthermore, the IDS product is marketed as offering a high yield, and this could potentially increase the commitment of KinderCare to distribute a large proportion of its operating cash flows.
S&P said it remains concerned about the declining occupancy rates at KinderCare's child care centers. While the company has greatly reduced the number of new facilities it opened in the 40 weeks ended March 5, 2004, compared with the previous year, S&P also remains concerned about the company's future capital spending to open new centers.
© 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.