Dutch Retailer Hema Upgraded To 'CCC+' From 'SD' After Completing Distressed Exchange; Outlook Negative

We believe Hema B.V. will maintain sufficient liquidity to service debt over the next 12 months, following completion of debt restructuring on Oct. 19, 2020, which materially reduced the financial burden on its balance sheet. That said, we still view Hema's capital structure as potentially unsustainable in the longer term, given our expectation that amid the pandemic the group will post negative free operating cash flow (FOCF) in fiscals 2020 and 2021 (years ending Jan. 31, 2021, and 2022, respectively), although cash flow may improve in fiscal 2021, depending on business and economic conditions. We are therefore raising our issuer credit rating on Hema B.V. to 'CCC+' from 'SD' (selective default), and affirming our ratings on the newly issued debt

...November 3, 2020 - We believe Hema B.V. will maintain sufficient liquidity to service debt over the next 12 months, following completion of debt restructuring on Oct. 19, 2020, which materially reduced the financial burden on its balance sheet. - That said, we still view Hema's capital structure as potentially unsustainable in the longer term, given our expectation that amid the pandemic the group will post negative free operating cash flow (FOCF) in fiscals 2020 and 2021 (years ending Jan. 31, 2021, and 2022, respectively), although cash flow may improve in fiscal 2021, depending on business and economic conditions. - We are therefore raising our issuer credit rating on Hema B.V. to '###+' from '##' (selective default), and affirming our ratings on the newly issued debt instruments. - At the same time, we are withdrawing the ratings on the old debt instruments, following completion of the recapitalization. - The negative outlook reflects our expectation that Hema's operating performance...

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