S&P cuts True Religion on bankruptcy

S&P said it lowered the corporate credit rating on True Religion Apparel Inc. to D from CCC.

At the same time, the agency downgraded the issue-level rating on the first-lien term loan facility to D from CCC. The recovery rating was 3, indicating an expectation for meaningful recovery (50%-70%; rounded estimate: 55%) at the time of the chapter 11 filing.

S&P also lowered the issue-level rating on the second-lien term loan to D from CC. The recovery rating was 6, indicating an expectation for negligible recovery (0%-10%; rounded estimate: 0%) at the time of the bankruptcy filing.

On July 5, True Religion announced that it filed for Chapter 11 bankruptcy protection.

“The company plans to engage lenders in an arranged debt-for-equity swap amid weakness in the competitive retail environment and as the company looks to restructure its struggling operations,” S&P said in a news release.

“True Religion had about $368 million of its $400 million first-lien term loan and all of its $85 million second-lien term loan debt outstanding, as well as some outstanding borrowings under its asset-backed lending revolving credit facility, at the time of the bankruptcy filing.”

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