Moody’s rates House of Fraser notes B3

Moody’s Investors Service said it assigned a provisional B3 rating to House of Fraser (Funding) plc’s envisaged £175 million floating-rate senior secured notes due 2020.

The proceeds from the new notes, together with those from a pari-passu ranking £125 million term loan, will be used to effect full repayment of the existing £250 million senior secured notes due 2018. The remaining proceeds will be added to the company’s cash balances.

The company’s corporate family rating of B3 and probability of default rating of B3-PD are unchanged, along with the same ratings on its parent company, Highland Group Holdings Ltd.

The outlook remains stable.

The company has made decent progress in terms of top-line growth and profitability over recent years, underpinned by a clear premium brand positioning and a strongly growing online offering, which complements their store network, Moody’s said.

The refinancing will provide somewhat increased financial flexibility and liquidity to support the ongoing store refurbishment program and investment in online systems, the agency said.

But the company’s leverage and interest cover are expected to remain relatively weak for the rating category, the agency added.

© 2015 Prospect News.
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