TEXT-S&P assigns Wolverine World Wide preliminary 'B+' rating
Sept 24 - Standard & Poor's Ratings Services said today that it assigned its 'B+' preliminary unsecured debt rating to Rockford, Mich.-based Wolverine World Wide Inc.'s proposed $375 million senior unsecured notes due 2020. At the same time, we are assigning our preliminary '5' recovery rating, reflecting our expectations of modest (10%-30%) recovery for the lenders in case of a payment default. We expect the company to use net proceeds from this debt issuance to partially finance the pending roughly $1.23 billion acquisition of the Performance and Lifestyle Group (PLG) business of Collective Brands Inc. We expect the transaction to be completed in October 2012; however, if the acquisition is not consummated as expected, the company will redeem the notes raised under this offering. Our preliminary ratings on Wolverine, including the preliminary 'BB-' corporate credit rating, reflect our view that the company's financial profile will be "aggressive" following completion of the PLG acquisition, when the company will have a high level of debt, with pro forma debt-to-EBITDA leverage in excess of 4.5x. In addition, we believe the company's financial policy is moderate, given the pending debt-financed transaction; the company has operated with very modest debt levels in recent years. Our ratings further reflect our view of Wolverine's "fair" business risk, underpinned by the group's strong niche positions in the U.S. footwear market, and the strength and growth potential of most of its brands. The business risk assessment is constrained by our view of the fragmented and competitive market in which Wolverine operates, as well as by its limited geographic diversification and narrow product offering. RELATED CRITERIA AND RESEARCH -- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATING LIST Wolverine World Wide Inc. Corporate credit rating BB- (prelim)/Stable/-- Ratings Assigned Wolverine World Wide Inc. Senior unsecured $375 million notes due 2020 B+ (prelim) Recovery rating 5 (prelim) Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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