Moody’s downgrades Douglas

Moody’s Investors Service said it downgraded to Caa1 from B3 the corporate family rating and the probability of default rating to Caa1-PD from B3-PD of Kirk Beauty One GmbH (Douglas).

Concurrently, Moody’s lowered to Caa3 from Caa2 the rating on the €335 million of senior notes due 2023 to B3 from B2, the rating on the senior secured debt instruments borrowed by its subsidiaries, comprising the €200 million revolving credit facility, the €1.67 billion term loan B and the €300 million of senior secured notes due 2022 issued by Douglas GmbH.

Moody’s changed the outlook to negative from ratings under review.

This rating action finishes the review for downgrade started on March 25, Moody’s said.

“The downgrade of Douglas’ ratings mainly reflects its weakened liquidity profile owing to the deterioration in the operating performance following the spread of the coronavirus outbreak across Europe, and the risk that a weak recovery might limit its ability to refinance its large 2022 debt maturities,” said Lorenzo Re, a Moody’s vice president, senior analyst and lead analyst for Douglas, in a press release.

The outlook reflects Moody’s expectation Douglas’ liquidity will continue to weaken and the risk the company may be challenged to restore a sustainable financial profile in case of weak sales recovery, preventing the company from refinancing its upcoming maturities, the agency said.

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