By  on December 22, 2009

Burlington Coat Factory Warehouse Corp. won a ratings upgrade from Standard & Poor’s based on its plan to reconfigure its $800 million asset-based credit facility.

S&P raised its rating on BCF’s secured debt to “B-minus” from “CCC-plus” while maintaining the Burlington, N.J.-based off-price retailer’s stable outlook and overall “B-minus” corporate credit rating.

BCF intends to extend the maturity date of $600 million of its revolving credit facility to January 2014 and pay off $200 million upon its May 2011 expiration. In addition, it is seeking to extend the maturity of $550 million of its $865 million term loan, due in May 2013, for two years.

The upgrade moves BCF’s rating up one notch and, while still in speculative territory, implies the issuer “has the capacity to meet its financial commitment.”

In a note on the revision, S&P analyst Diane Shand wrote: “BCF’s performance remains challenged, and we do not expect operations to improve over the near term given increasingly difficult retail conditions. Same-store sales fell 5.25 percent in fiscal 2008 and 2.5 percent in fiscal 2009. Margins showed some improvement in fiscal 2008 and 2009 primarily because of cost reductions. We believe margins will come under pressure in the near term given our expectations for weak sales and highly promotional conditions.”

Cost cuts last year totaled $70 million. During the year ended May 30, the company’s net loss grew to $191.6 million from $49 million as impairment and separation items expanded to $339 million from $25.3 million in the prior year. Sales were up 4.4 percent to $3.54 billion from $3.39 billion.

Moody’s Investors Service assigned a “B3” to the proposed $550 million term loan, meaning it is “speculative or subject to high credit risk.”

BCF also revealed in a Securities and Exchange Commission filing that Jay Margolis, most recently chief executive officer of Limited Corp., had been added to its board, increasing the number of directors to six from five.

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