| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers M > Headlines for Michaels Stores Inc. > News item |
Moody's rates Michaels notes Caa1
Moody's Investors Service said it assigned a Caa1 rating (LGD6, 93%) to Michaels FinCo Holdings, LLC proposed offering of $700 million senior pay-in-kind toggle notes.
The outlook was revised to stable from positive.
Proceeds will be used to fund a distribution to Michaels Holdings' current owners.
Moody's also upgraded the rating assigned to Michael's Stores' senior secured term loan due 2020 to Ba3 (LGD2, 26%) from B1 (LGD3, 33%).
The B2 corporate family rating was affirmed. The company also has $1 billion senior notes due 2018 at B3 (LGD4, 67% from LGD5, 77%) and $256 million senior subordinated notes due 2016 at Caa1 (LGD5, 86% from LGD6, 94%).
The revision in the outlook reflects the sizable increase in debt following this offering, according to the agency. In view of the increase in debt and shift toward a more aggressive financial policy, the agency said it does not think an upgrade is now likely.
The Caa1 rating assigned to the Michaels Holdings notes reflect that they are an obligation of the newly formed holding company and will not be guaranteed by Michaels Stores Inc., a wholly owned subsidiary of Michaels Holdings and the principal operating company.
Michaels' B2 corporate family rating reflects the company's high leverage with debt to EBITDA in the low six times range and interest coverage near two times following this transaction, the agency said.
The rating reflects the company owners' aggressive financial policies, evidenced by this debt-financed distribution, the agency noted.
Michaels has a strong market position in the arts and craft segments, as evidenced in its high operating margins and a track record of driving higher sales, Moody's said.
© 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.