Moody’s cuts Franchise Group

Moody's Investors Service said it downgraded Franchise Group, Inc.'s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and senior secured second-lien term loan to Caa2 from Caa1.

However, the agency said it confirmed the B2 ratings on Franchise's senior secured first-lien term loans. The outlook is now negative. Previously the ratings were in review for downgrade and this completes the review that began on May 15. Moody’s withdrew the company's speculative grade liquidity rating SGL-3 because the company is now private.

“The CFR downgrade to B3 reflects governance considerations, including Franchise Group's increased debt and leverage resulting from the Aug. 21, 2023 completion of its acquisition by a consortium led by management in partnership with B. Riley Financial, Inc. and Irradiant Partners, LP. As a result of the transaction, Franchise Group became a privately held subsidiary of Freedom VCM, Inc. (Freedom) and Freedom VCM Holdings, LLC.

“The downgrade also reflects Franchise Group's weakened operating performance and credit metrics resulting from the ongoing challenges in its home furnishing businesses that drove a 3.9% decline in consolidated revenue in the first half ended July 1, 2023 and a 44.6% decline in adjusted EBITDA,” Moody’s said in a press release.

© 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.