S&P rates Warnaco loan BB, cuts notes to B+

Standard & Poor's said it assigned a BB bank loan rating with a recovery rating of 1 to the Warnaco Group Inc.'s proposed $200 million term loan due 2012.

S&P also affirmed the company's BB- corporate credit rating and lowered the 8 7/8% senior unsecured notes due 2013 to B+ from BB-, reflecting its junior position relative to the increased amount of secured debt in the capital structure.

The outlook is positive.

Warnaco announced it will acquire the companies that operate the licenses and related wholesale and retail businesses of Calvin Klein jeans and accessories in Asia and Europe and the Calvin Klein bridge line of sportswear and accessories in Europe for about $286 million.

The transaction will be funded with a combination of cash and proceeds from the proposed bank facility. As part of the acquisition, Warnaco and Calvin Klein Inc., a wholly owned subsidiary of Phillips-Van Heusen (BB+/stable), will amend and extend the existing licensing agreements for 40 years.

The ratings affirmation is based on S&P's review of the company's steadily improving operating performance and its expectation that Warnaco will focus on integrating its future Asian and European businesses, de-leveraging its balance sheet and that the company will not make any share repurchases during this period.

© 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.