Moody's assigns B3 to Kirk Beauty Two

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Kirk Beauty Two GmbH. The outlook is stable.

Concurrently, Moody's withdrew the Caa1 CFR and the Caa1-PD probability of default rating of the Douglas group's previous parent company, Kirk Beauty One GmbH.

Moody's also gave a B3 rating to the planned senior secured instruments to be issued by Douglas GmbH, including €1 billion of notes due 2026, a €1.08 billion term-loan B due 2026 and a €170 million revolving credit facility and a Caa2 rating to the €300 million PIK notes to be issued by Kirk Beauty SUN GmbH and guaranteed by Douglas.

Note and term loan proceeds with a €220 million capital increase will be used to increase the available cash on the balance sheet and to repay the debt, including the €335 million of senior notes due 2023 issued by Kirk Beauty One, the €300 million senior secured notes due 2022 issued by Douglas GmbH and the €1.67 billion term loan and the drawings under the €200 million revolver due 2022 borrowed by several group's entities. The ratings on these instruments will be withdrawn upon repayment after the refinancing.

"The B3 CFR reflects Douglas' reduced leverage and improved liquidity profile following the completion of the proposed refinancing, as well as Moody's expectation that its operating performance will improve following the recently announced transformation plan. However, this improvement remains subject to execution risk, and the initial leverage remains high at around 8x, which leaves the company weakly positioned in the rating category," said Lorenzo Re, a Moody's vice president, senior analyst and lead analyst for Douglas, in a press release.

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