Fitch gives Levi Strauss notes BB-

Fitch Ratings said it assigned a BB- rating to Levi Strauss & Co.'s $475 million issue of senior unsecured notes.

The outlook is positive.

Proceeds, together with revolver borrowings, will be used to repay the company's $525 million of 7 5/8% senior notes due 2020.

Fitch said the rating and positive outlook reflect its view that Levi will begin to generate EBITDA growth as the benefits from its global productivity initiative flow to the bottom line, particularly in fiscal 2016. In addition to taking significant costs out of the business, Levi's management is also committed to reducing debt levels and strengthening its balance sheet.

The agency expects these factors to drive adjusted leverage toward the low-3 times range over the next two years from 3.6 times currently. It also expects free cash flow will be positive in the range of $200 million annually excluding restructuring costs.

The rating continues to reflect Levi's well-known brands, strong market shares and geographic diversity, as well as the challenging consumer environment pressuring top-line performance, Fitch said.

© 2015 Prospect News.
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