Moody's lowers Collective Brands to negative

Moody's Investors Service said it revised Collective Brands Inc.'s outlook to negative from stable and also placed the B1 rating assigned to the company's senior secured term loan due October 2019 on review for possible downgrade.

The company's B2 corporate family rating and B2-PD probability of default rating were affirmed.

The outlook revision reflects Collective's proposed $175 million add-on to the company's existing $305 million senior secured term loan with proceeds to be used to fund a distribution to the company's owners.

The proposed distribution represents more than 50% of the sponsor's initial equity investment made at the time of the October 2012 leveraged buyout of Collective Brands, Moody's said.

As a result, the agency said it considers the company's financial policies to be more aggressive than initially expected.

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