S&P: Spencer Spirit loan B

Standard & Poor’s said it affirmed the B corporate credit rating on SSH Holdings Inc., the direct parent of Spencer Spirit Holdings Inc.

The outlook is stable.

The agency also said it removed all of the ratings from CreditWatch negative, where they were placed in March.

S&P also said it assigned a B rating to the company’s $360 million senior secured term loan with a 4 recovery rating, indicating 30% to 50% expected default recovery.

The agency said it does not rate the company’s asset-based revolver, which allows for peak borrowings up to $150 million from June to October and $60 million for the remainder of the year.

The proceeds of the proposed term loan will be used to redeem $175 million of 11% senior secured notes and $165 million of 9% PIK toggle holding company senior notes with the remainder to pay tender premiums and related fees and expenses.

The ratings reflect the company’s weak business risk profile and aggressive financial risk profile, S&P said.

Spencer participates in the highly competitive and fragmented specialty teen apparel industry, which is facing declining mall traffic and heightened price competition from fast-fashion and online players, the agency said.

The ratings also consider Spirit’s exposure to the seasonal Halloween business and the challenges involved in opening and closing roughly 1,000 pop-up stores within a few months every year, S&P added.

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