Moody’s rates Kirk Beauty loans B1; notes B1, Caa1

Moody's Investors Service said it assigned a definitive B2 corporate family rating and a B2-PD probability of default rating to Kirk Beauty One GmbH.

Concurrently, the agency assigned a definitive B1 (LGD3) rating to the senior secured facilities made available to Kirk Beauty Zero GmbH comprising of a €200 million revolving credit facility, €1.22 billion term loan B and €300 million senior secured notes, all of which rank pari passu, and a definitive Caa1 (LGD6) rating to the €335 million senior notes issued by Kirk.

The outlooks are stable.

Moody's also withdrew the ratings of Beauty Holding One GmbH and its subsidiaries, including Beauty's corporate family rating of B2, probability of default rating of B2-PD and the B1 rating on the senior secured bank debt of its subsidiary Beauty Holding Two GmbH (all under review for upgrade).

The definitive ratings are in line with the provisional ratings assigned on June 19 despite a change in the split of debt raised between senior secured and senior unsecured since the assignment of provisional ratings, the agency said.

Kirk's B2 corporate family rating reflects: (a) The discretionary nature of beauty spend, which leaves the company exposed to consumer sentiment in general and Christmas in particular; (b) the ongoing highly competitive nature of the industry where differentiation via service can be of secondary importance to price for consumers; (c) modest absolute scale and a concentrated supplier base; and (d) high leverage at closing of 6 times.

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