Moody’s lowers House of Fraser

Moody’s Investors Service said it downgraded the corporate family rating of House of Fraser (UK & Ireland) Ltd. to Caa2 from Caa1 and its probability of default rating to Caa2-PD from Caa1-PD.

Concurrently, Moody's downgraded the rating of the £165 million senior secured floating-rate notes due 2020 issued by House of Fraser (Funding) plc to Caa2 from Caa1.

The outlook remains negative.

The agency said the action reflects the company's particularly weak operating performance in fiscal year 2018 with EBITDA as reported by the company of £35.4 million and negative £31.4 million, significantly below Moody’s previous expectations, and the £63.6 million and negative £12.2 million reported in the same period a year earlier, respectively.

Moody’s said the downgrade also reflects refinancing risk associated with an expectation of a continued negative free cash flow generation and weak earnings in the next 12 to 18 months, which the agency estimates at around £45 million, despite the rent savings resulting from the implementation of the CVA.

© 2015 Prospect News.
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