S&P cuts Bass Pro, loan; rates loans B+

S&P said it lowered its corporate credit rating on Bass Pro Group LLC to B+ from BB-.

The outlook is stable.

The agency removed the rating from CreditWatch with negative implications, where it was placed on Oct. 3.

S&P also lowered its issue-level rating on the company's $1.74 billion term bank loan due 2020 to B+ from BB- and removed it from CreditWatch negative. The recovery rating remains 3, indicating an expectation for meaningful recovery at the lower end of the 50% to 70% range.

At the same time, the agency assigned a B+ issue-level rating to the new $3.37 billion term loan with a 3 recovery rating. It also assigned a B+ issue-level rating with a 3 recovery rating to the new $500 million asset sale facility. In both cases, the 3 recovery rating indicates an expectation for meaningful recovery, at the lower end of the 50% to 70% range.

"The downgrade reflects the significant increase in the company's adjusted debt from the Cabela's acquisition, which results in meaningfully weaker credit metrics. We view the company's substantially increased scale, as well as improved competitive standing as a result of the acquisition as positive factors," S&P credit analyst Andrew Bove said in a news release.

"We believe Cabela's has a relatively complementary geographic store footprint, which will help Bass Pro tap into new markets where Cabela's has already established a loyal customer base. Although the Cabela's acquisition is considerably larger than any previous acquisition attempted by management and could present potential strategic execution challenges, we believe the relatively similar product offerings and customer bases of the two brands favors the combination's chances of success. For example, we assume new store growth will be slowed. In addition, we have a favorable view of the attractive loyalty attributes of the Cabela's credit card business."

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