Moody's rates SMCP notes B3

Moody's Investors Service said it assigned a B2 corporate family rating and a B1-PD probability of default rating to KKR Retail Partners KKR Sarl, the ultimate holding company of SMCP Group (Sandro Maje Claudie Pierlot). Concurrently, Moody's assigned a provisional B3 (LGD5, 78%) rating to the proposed €290 million worth of senior secured notes due 2020 to be issued by SMCP SAS. The outlook is stable.

The proceeds from the proposed issuance will be used to repay some existing debt, including a mezzanine facility and bilateral facilities, and to finance the acquisition by KKR and some members of management of the share capital of Groupe SMCP SAS, a subsidiary of SMCP. The financing of this acquisition will be supplemented by ordinary and preferred shares and convertible bonds issued to affiliates of KKR and some members of management.

"The B2 rating we have assigned to KKR balances SMCP group's small size, its exposure to fashion risk, reliance on the competitive and fragmented French market, limited brand portfolio focused on womenswear and its high leverage with its good brand recognition in the 'affordable luxury' segment, track record of dynamic sales growth and solid and growing profitability," Yasmina Serghini-Douvin, a Moody's vice president, senior analyst and the lead analyst for SMCP Group, said in an agency news release.

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