S&P lifts Lifetime loan rating

S&P said it raised Lifetime Brands Inc.’s term loan rating to BB- from B+ and upgraded the recovery rating to 2 from 3. The 2 rating indicates substantial (70%-90%; rounded estimate: 80%) recovery in default; whereas the 3 rating indicates meaningful (50%-70%, rounded estimate: 50%) recovery.

The company plans to amend its term loan and extend the facility's maturity to August 2027 from February 2025. The company will also cut the size of the term loan to $150 million from $200 million using about $50 million of borrowings from its asset-based lending credit facility, which will be leverage neutral, S&P said.

In June, Lifetime chiefly used cash on hand to buy back about $47 million of its term loan debt at a 5% discount. The agency said it estimates Lifetime shaved its S&P Global Ratings-adjusted leverage to about 4.9x for the 12 months ended June 30, from about 5.7x before the transaction.

“Despite the challenging conditions in the credit markets and elevated interest rate environment, Lifetime is continuing to proactively manage its capital structure by seeking to extend the maturity of its term loan before it becomes current in February 2024. We expect the company's interest costs will increase and its credit terms will tighten following the proposed amendment. Nonetheless, the maturity extension eliminates Lifetime's refinancing risk amid highly uncertain conditions,” S&P said in a statement.

The outlook is negative.

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