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Payless Downgraded

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On February 9, 2018, S&P Global Ratings lowered its corporate credit rating on Payless Inc. to CCC from B-, its $80 million first-lien tranche A-1 term loan to B- from B+ and its $200 million first-lien tranche A-2 term loan to CCC- from B-. According to S&P Global, the downgrade reflects the Company’s sustained weak operating performance trends, intensified by supply chain issues following its bankruptcy in 2017, which led to a sharp decline in same-store sales and an increase in markdowns in recent quarters. S&P expects performance will remain challenged over the next 12 months resulting in further weakening of liquidity through cash burn. S&P thinks these factors will lead to continued meaningful cash burn and pressure liquidity, resulting in shrinking availability on the ABL facility and possible covenant breach. Read more on distressed companies.

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