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S&P cuts Soho House, notes, loan
Standard & Poor's said it lowered its long-term corporate credit rating on Soho House & Co. Ltd. (formerly Soho House Group Ltd.) to CCC from B-.
The outlook is stable.
As a consequence, the agency also lowered its issue rating on Soho House's £152.5 million senior secured notes to CCC from B-. The recovery rating is unchanged at 4, indicating an expectation of average (30%-50%) recovery in the event of a payment default.
At the same time, S&P lowered its issue rating on the group's super senior revolving credit facility to B- from B+. The recovery rating is unchanged at 1, indicating an expectation of very high (90%-100%) recovery in the event of a payment default.
The agency also withdrew its issue and recovery ratings on the group's previously proposed £200 million senior secured notes, which were not executed.
S&P said the downgrade reflects its view that, despite rapid new club house openings and robust revenue growth, Soho House's aggressive debt-funded expansion strategy has weakened the group's overall EBITDA margin. Combined with weak liquidity, elevated leverage, and negative cash flows, the agency views the group's capital structure as unsustainable.
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