S&P cuts Head ratings

Standard & Poor's said it lowered its long-term corporate credit rating on The Netherlands-based sports equipment manufacturer Head NV to B+ from BB- and its senior unsecured debt rating on the company to B- from B due to ongoing challenging industry conditions.

The outlook is stable.

"The downgrade reflects Standard & Poor's view that Head is unlikely to improve its financial leverage to the expectations required for the previous ratings," said S&P credit analyst Olli Rouhiainen.

S&P is currently determining the ratings on a new €125 million bond issue that Head has announced. The rating on the new bond remains subject to a legal review of the guarantee structure supporting the bond. Although the majority of the new bond will be used to refinance existing debt, it will increase Head's outstanding total debt to $210 million from $177 million at Sept. 30.

"Current adverse exchange-rate movements are reducing Head's profitability due to the company's operating costs being denominated mainly in euros, while revenue is split between euros, U.S. dollars, and other currencies," said Rouhiainen. "In addition, low demand for tennis equipment, lack of travel to key diving destinations, and weak consumer sentiment in some markets are expected to hinder recovery in Head's credit protection measures."

© 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.