Moody's rates Stuart Weitzman loan B3

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Stuart Weitzman Acquisition Co. LLC and a B2 (LGD4, 51%) rating to the company's proposed $220 million senior secured term loan due 2020. The outlook is stable.

The proceeds from the loan and a $165 million equity contribution will be used to partially fund Sycamore Partners LLC's acquisition of Stuart Weitzman from parent company Jones Group Inc.

The agency said Stuart Weitzman's B2 rating reflects the company's limited scale in the luxury woman's footwear industry and moderate debt burden. The company will face an increased interest burden following this transaction, and free cash flow, while expected to remain positive, will be constrained over the next 12 to 24 months, Moody's said.

The company benefits from a strong brand awareness among luxury woman's shoe customers and has meaningful sales at all major high-end department stores, the agency said. The company also benefits from a flexible and efficient supply chain, and Moody's expects that the company will maintain good liquidity.

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