Moody's ups Edcon to stable; rates notes B2

Moody's Investors Service said it affirmed Edcon Holdings (Proprietary) Ltd.'s B2 corporate family and probability of default ratings and Caa1 (LGD6, 93% from LGD5, 89%) €378 million of senior unsecured notes due 2015.

Moody's assigned a B2 (LGD4, 53%) to the proposed €500 million of senior secured notes due 2018 to be issued by Edcon's subsidiary Edcon (Pty) Ltd.

Moody's said it changed Edcon's outlook to stable from negative.

Proceeds will be used to first settle the company's significant mark to market liability and for general corporate purposes.

The change in outlook is based on the expectation that the proposed transactions will be completed as proposed resulting in Edcon's debt maturity and overall liquidity profile improving as a result of addressing its near-term maturities, including the substantial current mark to market liability due to its foreign exchange hedges, Moody's said.

The outlook also recognizes Edcon's improved operating performance over the past year with like-for-like sales growth and market share recovery in some key categories, reduced bad debt accounts and improved leverage, the agency added.

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