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Moody’s cuts SVP-Singer
Moody's Investors Service said it downgraded SVP-Singer Holdings Inc.'s ratings including its corporate family rating to Ca from Caa2, its probability of default rating to Ca-PD from Caa2-PD, and the rating on the company's $370 million original principal amount senior secured first-lien term loan due 2028 to Ca from Caa2. The agency also changed the outlook to stable from negative.
The downgrade and outlook revision mirror SVP-Singer's heightened default risk including a distressed exchange due to the company's ongoing revenue declines, tight liquidity and unsustainable capital structure at the current earnings level, Moody’s said.
“ SVP-Singer's revenue declined year-over-year about 19% year-to-date through 3Q-2023, following a 30% decline in fiscal 2022. As a result, the company's financial leverage remains unsustainably high. SVP-Singer's company-adjusted EBITDA has declined by about two-thirds relative to the 2021 leveraged buy-out (LBO) transaction. In addition, the company's ongoing restructuring and other operating initiatives result in weak quality of earnings with large amounts of add-backs to un-adjusted EBITDA,” Moody’s said in a statement.
“However, SVP-Singer benefits from a strong market position in the global consumer sewing machines and related products market, supported by its portfolio of well-recognized brands. The company has good geographic and customer diversification and benefits from its sizable e-commerce and direct-to-consumer businesses,” the agency noted.
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