S&P Global Ratings assigned its ‘BBB-‘ issue-level rating and ‘1’ recovery rating to Wolverine World Wide Inc.’s (WWW) refinanced senior secured credit facility, which comprises a $1 billion revolving credit facility and a $200 million term loan due 2026.
The ‘1’ recovery rating indicates its expectation for very high recovery (90 percent to 100 percent; rounded estimate: 95 percent) in the event of a default.
At the same time, S&P lowered its issue-level rating on the company’s existing $550 million senior unsecured notes due 2029 to ‘BB-‘ from ‘BB’ and revised its recovery rating to ‘5’ from ‘4’. The ‘5’ recovery rating indicates S&P’s expectation for modest recovery (10 percent to 30 percent; rounded estimate: 15 percent) in the event of a default. S&P revised its recovery rating on the unsecured notes to reflect its lower recovery expectations for the unsecured lenders because of the increase in WWW’s secured debt following the $200 million upsizing of its revolver.
WWW used the proceeds from the refinancing to pay off its $200 million term loan due 2023. The company had an outstanding balance of approximately $310 million under the refinanced revolver at the time of the transaction close. S&P said it considers this refinancing to be leverage natural and has withdrawn its issue-level and recovery ratings on the repaid credit facility.
S&P said, “Our ratings on the company reflects its participation in the highly fragmented and competitive footwear industry with a portfolio of well-known brands, such as Merrell, Sperry and Saucony. They also reflect our expectation that WWW will maintain S&P Global Ratings-adjusted leverage of between 3x and 4x. WWW outperformed our expectations in the first half of 2021 due to the continued strong consumer demand for footwear. In addition, the company’s portfolio of active and outdoor footwear remains on-trend. We continue to expect WWW to maintain its margins supported by the combination of an improvement in its channel mix and a reduction in its promotional activities to offset increasing freight and input-cost pressures stemming from the congested supply chain.”