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S&P cuts Samsonite International loan to BB
S&P said it trimmed its issue-level rating on Samsonite International SA's senior secured credit facilities to BB from BB+
Along with the downgrade, the agency revised its recovery rating to 2 from 1 following Samsonite IP Holdings Sarl and co-borrower Tumi Inc.'s proposed incremental $500 million term loan B issuance. “This reflects the increase in the company's senior secured debt following the proposed offering,” S&P said in a press release.
The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; rounded estimate: 75%) in the event of a default. Samsonite IP and Tumi Inc. are wholly owned subsidiaries of the group parent, Samsonite International.
The company intends to use the proceeds add cash to its balance sheet and for general corporate purposes.
“We anticipate higher pricing on this add-on and the inclusion of a minimum liquidity covenant initially set at $200 million, stepping down to $100 million after the third quarter in 2021. All other terms including the security package and guarantor package are consistent with the existing term loan,” S&P said.
The agency also downgraded the rating on the company's unsecured debt to B+ from BB- and revised the recovery rating to 5 from 4. The 5 recovery rating indicates an expectation for modest recovery (10%-30%; rounded estimate: 25%) in the event of a default. ‘The lower recovery expectation reflects the increase in Samsonite's senior secured debt,” S&P said.
“Our BB- issuer credit rating remains unchanged. We expect the transaction to be leverage neutral provided the company maintains the cash on its balance sheet,” the agency said.
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