Near
Forumer storico
Che tu sappia general shopping sta pagando regolarmente o fanno i venezuelani?
Obbligazioni societarie HIGH YIELD e oltre, verso frontiere inesplorate - Vol. 2 (3 lettori)
- Creatore Discussione gionmorg
- Data di Inizio
fabriziof
Forumer storico
Sul senior paga,sul subordinato no
Fabrib
Forumer storico
Magician
Forumer attivo
Perfino gli analisti di ING (e non qualche forum) cominciano a chiedersi come agiscono le agenzie di Rating, visto che cambiano posizione al cambiare del "vento".
Peccato che poi i fondi sono obbligati a seguirle, creando così previsioni autoavveranti.
"How we move so fast from stable outlooks in March to the current position is a mystery"
mariarosa78
Forumer attivo
Un bacio a Tutti Voi Forumisti ........
Rallye? che ne dite per il crollo?
zoroaster
Forumer attivo
captain sparrow
Forumer storico
questo si che ha fatto HY
Alan Howard parie sur la crise italienne et empoche des centaines de millions de dollars | OBLIS
e solo per PF forti
Du haut rendement pour la nouvelle obligation NagaCorp Ltd | OBLIS
Alan Howard parie sur la crise italienne et empoche des centaines de millions de dollars | OBLIS
e solo per PF forti
Du haut rendement pour la nouvelle obligation NagaCorp Ltd | OBLIS
Chewy’s release as guarantor of PetSmart debt is credit negative
Last Monday, PetSmart Inc. (Caa1 negative) announced that it had completed a series of transactions whereby Chewy is no longer its wholly owned subsidiary and therefore, no longer a guarantor of obligations under PetSmart’s term loan. The release of Chewy’s guarantee under the term loan caused the release of PetSmart’s outstanding senior notes guarantee. Chewy’s release as guarantor is credit negative for PetSmart debtholders. Chewy remains a restricted subsidiary under PetSmart’s credit agreements and the indentures governing its outstanding senior notes, and a guarantor of the obligations under the company's asset-based revolver. PetSmart accomplished the transition by declaring a dividend of 20% of Chewy’s outstanding common stock to its parent company, Argos Holdings, which in turn made a dividend of this Chewy common stock to its parent company. Separately, PetSmart invested 16.5% of Chewy’s outstanding common stock in the form of a capital contribution to a wholly owned unrestricted subsidiary of PetSmart. The development is credit negative for PetSmart’s existing debtholders because it will dilute the collateral pool for PetSmart’s existing secured creditors. We assess that there are no significant restrictions in the credit agreements or indentures for a transfer of assets to non-guarantor restricted subsidiaries. Also, there is no requirement under the bond covenants to repay any debt from the proceeds of the 36.5% Chewy equity that was transferred because the equity will have no restrictions under the asset sale covenants of the bonds. Proceeds from the 20% of Chewy’s equity now held by the company’s parent could remain at that parent entity, or be a dividend to the sponsors. Moreover, the unrestricted subsidiary can issue debt that would be structurally senior to PetSmart debt. Proceeds from new debt issuance at the unrestricted subsidiary could be used to purchase PetSmart debt at a deep discount. Depending on the circumstances of such a purchase, we could deem it a distressed exchange and view it as a default. The acquisition of Chewy added $2 billion of debt to PetSmart’s balance sheet. PetSmart’s credit metrics are weak, and we expect lease-adjusted debt/EBITDA to be more than 8.0x over the next 12 months versus 5.4x before the Chewy acquisition, and only modest deleveraging. PetSmart’s operating performance has been well below our expectation, with declining same-stores sales amid increased competitive and pricing pressure from e-commerce and mass retailers. We expect Chewy to be EBITDA negative for at least the next 12 months, and expect PetSmart’s metrics to improve only because of stronger operating performance at its brick-and-mortar operations, synergies related to the Chewy acquisition and PetSmart’s ongoing cost-reduction program. Cost cuts target all business areas, including cost of goods sold, logistics, sourcing, store operating costs and overhead. However, PetSmart’s ability to improve debt/EBITDA over the next 12 months remains uncertain because reducing leverage depends on its ability to integrate the Chewy acquisition, generate synergies, prepay debt and simultaneously compete with peers such as Petco Animal Supplies, Inc. (B3 negative), mass merchandisers such as Walmart Inc. (Aa2 stable) and e-commerce players such as Amazon.com, Inc. (Baa1 positive). PetSmart’s current liquidity is very good, with the nearest debt maturity an asset-based revolver in December 2021, so the company has a significant liquidity runway. The revolver is $955 million until March 2020 and $750 million thereafter until December 2021. The company currently has no drawings under the revolver. Despite the high cash interest expense related to its sizable debt load, we believe that PetSmart’s internal cash sources will cover all cash needs over the next 12 months, including growing capital spending, with the company using excess cash flow for debt reduction.
Last Monday, PetSmart Inc. (Caa1 negative) announced that it had completed a series of transactions whereby Chewy is no longer its wholly owned subsidiary and therefore, no longer a guarantor of obligations under PetSmart’s term loan. The release of Chewy’s guarantee under the term loan caused the release of PetSmart’s outstanding senior notes guarantee. Chewy’s release as guarantor is credit negative for PetSmart debtholders. Chewy remains a restricted subsidiary under PetSmart’s credit agreements and the indentures governing its outstanding senior notes, and a guarantor of the obligations under the company's asset-based revolver. PetSmart accomplished the transition by declaring a dividend of 20% of Chewy’s outstanding common stock to its parent company, Argos Holdings, which in turn made a dividend of this Chewy common stock to its parent company. Separately, PetSmart invested 16.5% of Chewy’s outstanding common stock in the form of a capital contribution to a wholly owned unrestricted subsidiary of PetSmart. The development is credit negative for PetSmart’s existing debtholders because it will dilute the collateral pool for PetSmart’s existing secured creditors. We assess that there are no significant restrictions in the credit agreements or indentures for a transfer of assets to non-guarantor restricted subsidiaries. Also, there is no requirement under the bond covenants to repay any debt from the proceeds of the 36.5% Chewy equity that was transferred because the equity will have no restrictions under the asset sale covenants of the bonds. Proceeds from the 20% of Chewy’s equity now held by the company’s parent could remain at that parent entity, or be a dividend to the sponsors. Moreover, the unrestricted subsidiary can issue debt that would be structurally senior to PetSmart debt. Proceeds from new debt issuance at the unrestricted subsidiary could be used to purchase PetSmart debt at a deep discount. Depending on the circumstances of such a purchase, we could deem it a distressed exchange and view it as a default. The acquisition of Chewy added $2 billion of debt to PetSmart’s balance sheet. PetSmart’s credit metrics are weak, and we expect lease-adjusted debt/EBITDA to be more than 8.0x over the next 12 months versus 5.4x before the Chewy acquisition, and only modest deleveraging. PetSmart’s operating performance has been well below our expectation, with declining same-stores sales amid increased competitive and pricing pressure from e-commerce and mass retailers. We expect Chewy to be EBITDA negative for at least the next 12 months, and expect PetSmart’s metrics to improve only because of stronger operating performance at its brick-and-mortar operations, synergies related to the Chewy acquisition and PetSmart’s ongoing cost-reduction program. Cost cuts target all business areas, including cost of goods sold, logistics, sourcing, store operating costs and overhead. However, PetSmart’s ability to improve debt/EBITDA over the next 12 months remains uncertain because reducing leverage depends on its ability to integrate the Chewy acquisition, generate synergies, prepay debt and simultaneously compete with peers such as Petco Animal Supplies, Inc. (B3 negative), mass merchandisers such as Walmart Inc. (Aa2 stable) and e-commerce players such as Amazon.com, Inc. (Baa1 positive). PetSmart’s current liquidity is very good, with the nearest debt maturity an asset-based revolver in December 2021, so the company has a significant liquidity runway. The revolver is $955 million until March 2020 and $750 million thereafter until December 2021. The company currently has no drawings under the revolver. Despite the high cash interest expense related to its sizable debt load, we believe that PetSmart’s internal cash sources will cover all cash needs over the next 12 months, including growing capital spending, with the company using excess cash flow for debt reduction.