Dec 06 -
Standard & Poor's Ratings Services said today it assigned its 'BB' unsecured debt rating to
New York-based PVH Corp.'s proposed $500 million senior notes due 2022, one notch below the
'BB+' corporate credit rating. At the same time, we are assigning our '5' recovery rating to the
unsecured notes, 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 its
pending roughly $3 billion acquisition of Warnaco Group Inc. We expect the transaction
to be completed during the first quarter of 2013.
Our ratings on PVH, including our 'BB+' corporate credit rating, reflect our view
that the company's financial profile will continue to be "significant" following the Warnaco
acquisition, when the company will have pro forma debt-to-EBITDA leverage in the low- to mid-4x
area. In addition, we believe the company's financial policy continues to be moderate,
particularly as we expect the company to aggressively reduce acquisition-related debt with cash
flow from operations consistent with past practices. We believe the company's business risk
profile continues to be "satisfactory," reflecting the corporation's good market position as one
of the larger apparel companies, its portfolio of well-recognized brands, and its growing
RELATED CRITERIA AND RESEARCH
-- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept.
-- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Corporate credit rating BB+/Stable/--
$500 mil. notes due 2022 BB
Recovery rating 5