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Announcement:

Moody's: Lifestyle's ratings unchanged following tap bond issuance

Global Credit Research - 08 Mar 2012

Hong Kong, March 08, 2012 -- Moody's Investors Service has assigned a Baa3 rating to the US$150 million Reg S US dollar bonds to be issued by Lifestyle International Holdings Ltd.

At the same time, Moody's has affirmed Lifestyle's Baa3 issuer rating.

The ratings outlook is stable.

These bonds will be issued under the same terms and conditions as those issued on 26 January 2012.

The net proceeds of the bonds will be used for general corporate purposes.

RATINGS RATIONALE

"The bond re-tap will somewhat weaken Lifestyle's immediate credit metrics - adjusted Debt/EBITDA rising to 4.9x from 4.5x. However Moody's expects Lifestyle to ramp up its operations over the next 1-2 years such that adjusted Debt/EBITDA will stay around 3.5x - 4.0x, which is still commensurate with its Baa3 rating," says Ken Chan, a Moody's Vice President and Senior Analyst.

"Headroom for further debt will be limited though," adds Chan.

"At the same time, the additional bond issuance will further enhance the already strong liquidity profile of the company," says Chan, also the lead analyst for Lifestyle.

"We expect the company will maintain a prudent approach in managing its China expansion. But, a material deviation from such expectations -- such as a gearing up of more debt -- could pressure the ratings," adds Chan.

The Baa3 ratings continue to reflect Lifestyle's established operating track record and resilient cash flow through various down-cycles, and its business model of owning its department stores, which lowers financial risk.

On the other hand, the ratings are constrained by Lifestyle's current high level of revenue from its flagship store in Hong Kong, and its expansion in the highly competitive and fragmented department-store market in China.

The principal methodology used in rating Lifestyle International Holdings Ltd. was the Global Retail Industry Industry Methodology published in June 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Listed on the Hong Kong Stock Exchange in 2004, Lifestyle International Holdings is a Hong Kong-based retail operator that focuses on mid- to upper-end department stores through its two retailer brand names, SOGO and Jiuguang. The company owns two SOGO stores in Hong Kong and three Jiuguang stores in China.

Ken Chan
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Moody's: Lifestyle's ratings unchanged following tap bond issuance
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

 


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© 2013 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
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