S&P rates Sears notes BB+

Standard & Poor's said it assigned BB+ issue and 1 recovery ratings to Sears Holdings Corp.'s proposed $665 million senior secured second-lien notes due 2018.

Of the $665 million proposed debt issuance, $165 million will be offered to Sears' pension fund through a private placement.

Proceeds will be used to repay borrowings under the senior secured revolving credit facility and to fund working capital requirements, capital expenditures,and other uses, such as required pension contributions.

"The rating on Sears reflect our analysis that sales will remain under pressure as consumer spending stays weak during the fragile economic recovery, but cost control and improving profitability at Kmart will contribute to relatively stable operating margin in fiscal 2010," S&P analyst Ana Lai said in a statement.

It also reflects expectation that following the issuance of the second-lien notes, borrowing needs under the revolving credit facility will be reduced and Sears would repay $425 million in debt maturities in 2011, the agency noted.

"The company's business profile is 'weak' because of the intense competition from its peers, underinvestment in its store base relative to its peers, and a merchandising strategy that has not resonated with consumers," Lai added.

© 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.