Approximately $500 million of rated debt affected
New York, October 13, 2011 -- Moody's Investors Service today placed Liz Claiborne's ("Liz")
ratings on review for a possible upgrade following the company's
announcement that it entered into definitive agreements to sell its Liz
Claiborne, Monet and Kensie brands, and that it has completed
the sale of its Dana Buchman brand. Total cash proceeds expected
from these asset sales total approximately $328 million.
These transactions are expected to be concluded in the fourth quarter
of 2011.
Ratings placed on review for possible upgrade:
Corporate Family Rating (CFR) at B3
Probability of Default Rating at B3
EUR221.5 million senior unsecured notes due July 2013 at Caa2 (LGD
5, 88%)
US$220 million senior secured notes due April 2019 at B2 (LGD 3,
36%)
RATINGS RATIONALE
The review for possible upgrade considers that the expected cash proceeds
from the pending asset sales -- along with the $85
million from the pending sale of Mexx (also expected to be concluded in
fourth quarter of 2011) would alleviate Moody's concerns regarding
the company's outstanding EUR 221.5 senior unsecured notes
that mature in July 2013. Without these asset sale proceeds,
Moody's believes Liz runs the risk of not being able to refinance
the EURO maturity given that the company does not have the existing resources
in terms of cash on hand or revolver availability to repay this debt maturity,
a key factor behind the company's current B3 CFR. Should
the transactions conclude as proposed, it is likely Liz's
CFR will be raised one-notch to B2 from B3.
The principal methodology used in rating Liz Claiborne was the Global
Apparel Industry Methodology published in May 2010. Other methodologies
used include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in
June 2009. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
Headquartered in New York, NY, Liz Claiborne designs and markets
brands including Liz Claiborne, Juicy Couture, kate spade,
Lucky Brand Jeans and Mexx. Revenues were approximately $2.4
billion for the latest 12-month period ending July 2, 2011.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are considered EU Qualified
by Extension and therefore available for regulatory use in the EU.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
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uses in assigning a rating is of sufficient quality and from sources Moody's
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third-party sources. However, Moody's is not
an auditor and cannot in every instance independently verify or validate
information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating
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Please see ratings tab on the issuer/entity page on www.moodys.com
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Consequently, Moody's provides a date that it believes is
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for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Scott Tuhy
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Kendra M. Smith
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's places Liz Claiborne's B3 CFR on review for a possible upgrade