MOODY’S UPHOLDS RATING ON SAKS HOLDINGS’ DEBT
NEW YORK — Moody’s Investors Service confirmed its ratings Friday on debt of Saks Holdings, parent company of Saks Fifth Avenue, following the news that the retailer may be sold.
“The decision to shop the company rather than sell shares in the market creates the potential for Saks’ leverage to increase, reversing its improving trend,” Moody’s said. About 38 percent of Saks’ equity is publicly traded; the rest is controlled by the Bahrain-based investment bank Investcorp and management.
The agency further said the retailer’s performance and strategy may be hurt over the next few months if management becomes distracted in the sale process. However, it also noted that Saks’ rating may improve if the company is bought by a financially sound firm. As reported, Saks said Thursday that it is exploring strategic alternatives, including a possible sale or merger of the company.
The ratings outlook remains stable, Moody’s said, with $200 million in notes of Saks Holdings, rated “B1,” and a $350 million revolving credit facility of Saks & Co., a subsidiary, rated “Ba2.”
Saks’ stock on the New York Stock Exchange Friday fell 15/16 to close at 26 9/16, following a bump up Thursday of 2 11/16.