Moody’s assigns Neiman Caa1

Moody’s Investors Service said it assigned first-time ratings to NMG Holding Co., Inc. (Neiman) following its emergence from bankruptcy, including a Caa1 corporate family rating, Caa1-PD probability of default rating and a Caa2 rating on both its $700 million senior secured term loan and $50 million senior secured notes.

A first-priority lien on all of Neiman’s assets (which includes real property and intellectual property), excluding the collateral securing its $900 million asset-based revolving credit facility secures the term loan and notes. Also, the notes and term loan will have a second-priority lien on collateral securing its ABL, largely its inventory. On Friday, Neiman emerged from Chapter 11 proceedings, reducing its funded debt load from about $5 billion pre-emergence to $1.1 billion, the agency said.

“The Caa1 CFR reflects Neiman’s weak credit metrics as it contends with the significant reduction in demand for luxury apparel during the current pandemic,” said Christina Boni, a Moody’s vice president, in a press release. “Despite the high leverage at Neiman, its capital structure following its emergence will enable Neiman to maintain adequate liquidity as it works to return its business to more normalized profitability levels.”

The outlook is stable. “The stable outlook reflects Moody’s view that although that Neiman’s operational performance will be hurt in fiscal 2020 by the disruption of Covid-19, the company has an affluent customer which is expected to return to more normalized levels of spending when the demand for its products, particularly apparel, and traffic to its key urban markets recover,” Moody’s said.

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