Moody's cuts Finlay to distressed

Moody's Investors Service said it downgraded the corporate family and probability-of-default ratings of Finlay Fine Jewelry Corp. to Caa2 from B3 and the company's $200 million senior unsecured notes to Caa3 (LGD5, 84%) from Caa1 (LGD5, 76%).

The outlook is stable.

According to Moody's, the downgrade reflects the closure of 94 out of the 350 jewelry departments when license agreements expire on Jan. 31, 2009 at Macy's Inc. locations.

The news comes amid weak operating performance and follows an increase in debt levels to finance the Bailey Banks & Biddle acquisition, the agency noted.

As a result, Moody's said it expects further weakening in the company's earnings, credit metrics and free cash flow to levels that could lead to an inability to improve financial flexibility over the medium term and prevent a default on debt securities. The downgrade also reflects a retail environment that could remain soft during 2008.

The Caa2 corporate family rating reflects the company's continued erosion in its core host department store business, its very weak credit metrics and its very thin profitability, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.