Moody's rates Samsonite loans Ba3, cuts notes

Moody's Investors Service said it assigned Ba3 ratings with loss-given-default assessments of LGD2 (25%) to Samsonite Corp.'s $80 million senior secured revolving credit facility and $450 million senior secured term loan, confirmed the corporate family rating at B1 and downgraded the company's €100 million senior unsecured notes to B1 from Ba3 and $205 million 8 7/8% subordinated notes to Caa1 from B3.

The outlook is positive, and this concludes the review for possible upgrade begun on Sept. 13.

Proceeds from the new facilities, along with a portion of outstanding cash balances, will be used to fund a special dividend and debt repurchase and to pay associated fees and premiums.

The confirmation reflects Moody's concern that the proposed $175 million special dividend will significantly increase leverage and weaken credit metrics to a level that is inconsistent with an upgrade at this time. The agency estimated that the pro forma debt-to-EBITDA ratio will exceed 6x times upon completion of the transaction, up from 4.1x for the last 12 months ended July 30.

The positive outlook reflects Moody's expectation that the company will continue its profitable growth, both organically and through further investment, while improving free cash flow generation and rapidly reducing leverage.

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