Moody's may lower General Shopping

Moody's Investors Service said it placed the Caa2 senior unsecured rating of General Shopping Finance Ltd. and the Ca subordinated debt rating of General Shopping Investments Ltd. on review for downgrade.

The outlook also was changed to rating under review from stable.

On Dec. 26, General Shopping e Outlet do Brasil announced its intent to transfer the equity interests, direct or indirectly held, in 11 of 16 of its shopping centers to a real estate investment fund and to distribute about R$829 million of unrealized profits in February 2019, Moody's explained.

The company expects to distribute about R$207 million in cash and the rest in shares in the real estate fund, the agency said.

For shareholders who opt to not receive shares in the fund, they can choose to receive a local perpetual bond, Moody's said.

The review will focus on the company's significantly reduced portfolio and cash flow generation to service the debt related to its $164.2 million10% senior unsecured perpetual bonds, which currently have a Caa2 rating, the agency said.

The review also will assess any complexities related to the company's prospective capital structure, including the $150 million 12% subordinated perpetual bonds, which currently have a Ca rating, Moody's said.

The agency also will consider the company's operational strategy going forward and whether it will continue to operate as an infinite life company.

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