Moody’s Investors Service assigned a Ba2 rating to Wolverine World Wide, Inc.’s proposed $550 million senior unsecured notes due 2029. Wolverine’s existing ratings are unchanged, including its Ba1 corporate family rating (CFR), Ba1-PD probability of default rating (PDR), Ba2 ratings on its existing unsecured notes, and SGL-1 speculative grade liquidity rating. The rating outlook is stable.
Proceeds from the new notes will be used, together with a $35 million revolver draw, to redeem $250 million 5 percent unsecured notes due 2026 and $300 million 6.375 percent unsecured notes due 2025 and to pay related fees and expenses. The assigned rating is subject to review of final documentation.
“The refinancing is credit positive because it will result in annual interest expense savings of around $8 million and extend the company’s debt maturity profile,” stated Moody’s Vice President, Mike Zuccaro.
Ratings Rationale |
Wolverine’s Ba1 CFR reflects its meaningful scale in the global footwear industry, its sizable portfolio of brands that appeal to a broad range of consumer needs, and dependable replenishment demand cycles of the footwear category due to normal product wear and tear. The rating also reflects Moody’s expectation for a significant improvement in financial metrics, with lease-adjusted debt to EBITDA falling near 3.5x and EBITA to interest coverage near 6 times in 2021, as Wolverine starts repaying acquisition debt and continues to rapidly recover from the pandemic-related downturn. Liquidity is very good, supported by balance sheet cash, positive free cash flow and ample availability under its revolving credit facility. Wolverine is constrained by its relatively small absolute revenue scale and its narrow product focus in the footwear segment and a greater degree of a fashion risk for certain brands.
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