S&P rates Michaels Stores notes CCC+

Standard & Poor's said it assigned its CCC+ issue-level rating to Michaels Stores Inc.'s proposed $260 million senior subordinated notes due 2020, with a recovery rating of 6, indicating an expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default.

The CCC+ rating is two notches below the B corporate credit rating.

According to the company, it plans to use net proceeds, along with cash on hand, to redeem its outstanding 11 3/8% senior subordinated notes due 2016. Even though the proposed refinancing will materially lower interest expense on the specific debt issue, S&P said it does not anticipate it to have a meaningful impact on consolidated credit protection measures.

Michaels' debt leverage was 4.9x at third-quarter ended Nov. 2, which remains in line with S&P's expectations.

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