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Moody's upgrades Levi Strauss, rates notes B3
Moody's Investors Service said it upgraded Levi Strauss & Co.'s corporate family rating to B2 from Caa1, its senior secured debt to B1 from B3 and its senior unsecured debt to B3 from Caa2. The outlook is stable.
Moody's also assigned B3 ratings to the company's proposed €100 million note due 2013, which will be an add-on to its existing euro note, and a $350 million senior unsecured note due in 2016. Proceeds will be used to repay a $489 million senior secured term loan, $17 million of prepayment premiums and roughly $12 million in transaction costs.
The upgrade recognize the significant progress the company has made in stabilizing its business, improving profitability and liquidity; the resolution of its long-standing tax issues; the company's extended maturity profile and reduced interest expense following refinancing and Levi's significant geographic diversification, the agency said.
The ratings also reflect the intense competitive environment that Levi Strauss faces; the potential for volatility in gross margin and working capital; the impact of currency fluctuations on results and the underperformance of the Dockers brand, Moody's added.
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