NEW YORK — Moody’s Investors Service on Thursday changed the direction of its review of Saks Inc. to a possible upgrade of ratings from a potential downgrade because the company improved its liquidity and effectively cured the technical defaults triggered by its failure to file fiscal year-end financial statements in a timely manner.
The completion of Saks’ sale of its Proffitt’s and McRae’s operation for $622 million last month enhanced the retailer’s liquidity. As for the defaults, they were triggered by a “notice of default” under its $230 million senior convertible notes in June following a delay in its filing of certain financial statements. Saks secured irrevocable consents from holders of a majority of each series of its senior notes and convertible notes.
The delay, Moody’s said, is no longer an event of default under those notes. Banks involved in Saks’ committed bank facility previously agreed to waive any defaults in connection with the late filing of the financial statements.
Saks is in the midst of an internal investigation connected with its Saks Fifth Avenue business involving markdown allowances and chargebacks. The retailer is also the subject of a probe by the U.S. Attorney’s Office in Manhattan and the Securities and Exchange Commission.
Separately, Saks said Thursday second-quarter results, which would have been posted on Aug. 16, have been postponed pending completion and the filing of results for its 2004 fiscal year-end results and first quarter 2005. Saks said it anticipates filing the year-end and first-quarter results by Sept. 1, 2005, with second-quarter results to follow shortly thereafter.