Moody’s downgrades TOMS Shoes

Moody’s Investors Service said it downgraded TOMS Shoes, LLC’s corporate family rating to Ca from Caa3, probability of default rating to Ca-PD from Caa3-PD, and senior secured term loan rating to Ca from Caa3. The ratings outlook remains stable.

The downgrade reflects TOMS’ approaching October term loan maturity and Moody’s expectation of a near-term balance sheet restructuring or other default due to the company’s high leverage. Leverage was about 10 times as of the second quarter (Moody’s-adjusted debt/EBITDA, equivalent to about eight times based on management adjusted EBITDA and debt amounts excluding related party debt).

The Ca CFR mirrors the agency’s expectation of a near-term balance sheet restructuring or distressed exchange due to the company’s unsustainable capital structure and weak liquidity profile, including its October 2020 term loan maturity.

Subsequent to this rating action, Moody’s said it’s decided to withdraw the ratings because of inadequate information to monitor the ratings.

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