Moody's downgrades Premier Brands

Moody’s Investors Service said it downgraded Premier Brands Group Holdings LLC’s senior secured first lien term loan rating was downgraded to Caa3 from Caa2. The agency also cut Premier Brands’ corporate family rating to Caa3 from Caa1 and probability of default rating to Caa3-PD/LD from Caa1-PD. The LD indicates a limited default, which will be removed in three business days.

“The downgrades reflect the increased risk of default given Premier Brands' upcoming March 20, 2024 debt maturities, weak overall liquidity, and high leverage of 6.2x Moody's-adjusted debt/EBITDA as of September 30, 2022. While Premier Brands' revenue and earnings have grown significantly year-to-date Q3 2022, it is facing a pullback in retailer orders in jeanswear, as well as overall higher promotional activity and increased costs in the apparel sector,” the agency said in a press release.

Additionally, Moody’s said viewed Premier Brands cumulative 2022 debt repurchases as a distressed exchange under its definition of default because they result in a material economic loss to lenders.

In the second quarter of 2022, the company made a $16 million prepayment of its $154 million outstanding term loan balance at an about a 20% discount, under a waiver permitting the required 2021 excess cash flow sweep payment to be made with a discounted debt repurchase. Then through open market transactions, the company bought back $5 million more of the term loan at a similar discount.

The outlook is negative.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.