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Charming Charlie Ratings Lowered

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On October 19, 2017, S&P Global Ratings lowered its corporate credit rating on Charming Charlie, LLC to CCC from CCC+ and its $150 million senior secured term loan rating to CCC from CCC+. According to S&P Global, the downgrade reflects the expectation that weak operating trends will persist over the next 12 months, resulting in the Company’s continued dependence on its revolver for liquidity needs. Based on S&P’s forecast, they expect the cushion of compliance under the Company’s total leverage and interest coverage covenant ratios to tighten and believe this could lead to a covenant breach in 2018. S&P also believes that the risks of a distressed debt transaction to address the capital structure are elevating as 2019 maturities approach, performance remains soft and the broader retail sector remains under pressure. Read more on distressed companies.

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