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S&P rates TOMS Shoes loan B
Standard & Poor’s said it assigned a B corporate credit rating to TOMS Shoes LLC.
The agency also said it assigned a B rating to the company’s proposed $300 million secured term loan due 2020. The recovery rating is 3, indicating 50% to 70% expected default recovery.
The outlook is stable.
The ratings reflect the company’s aggressive financial policy and significant debt burden to support its pending acquisition by financial sponsor Bain Capital, S&P said.
Bain Capital will acquire a 50% interest and have voting control of TOMS while TOMS founder and CEO Blake Mycoskie will retain a substantial 50% stake, the agency said.
The agency said it estimates the company’s pro forma 2014 debt-to-EBITDA at about 6x and expects the transaction to close during third quarter 2014.
The ratings also reflect the company’s small scale, narrow business focus within the highly competitive casual shoe segment, S&P said, and reliance on a single brand.
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