PetSmart Inc.'s Proposed Senior Secured Notes Rated 'BB-' (Recovery: '1'), Unsecured Notes Rated 'CCC+' (Recovery: '6')

NEW YORK (S&P Global Ratings) Jan. 28, 2021--S&P Global Ratings today assigned its 'BB-' issue-level rating and '1' recovery rating to U.S-based PetSmart Inc.'s proposed $1.2 billion senior secured notes due 2028. The '1' recovery rating indicates our expectation for meaningful (90%-100%; rounded estimate: 90%) recovery in the event of a payment default. At the same time, we assigned our 'CCC+' issue-level rating and '6' recovery rating to the company's proposed $1.15 billion senior unsecured notes due 2029. The '6' recovery rating indicates our expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default. PetSmart will use the proceeds from these notes to refinance its existing capital structure. Our 'B' issuer credit rating and stable

...Simulated default assumptions - Simulated year of default: 2024 - EBITDA multiple: 5x - EBITDA at emergence: $552 million - Estimated gross enterprise value (EV) at emergence: $2.76 billion - Estimated value from the Chewy equity pledged to the secured lenders: $1.0 billion Simplified waterfall - Net enterprise value at default (after 5% administrative costs): $3.6 billion - PetSmart asset-based lending (ABL) outstanding: $400 million (unrated) - Senior secured debt claims: $3.5 billion - --Recovery expectations: 90%-100% (rounded estimate: 90%) - Senior unsecured debt claims: $1.2 billion - --Recovery expectations: 0%-10% (rounded estimate: 0%) Note: All debts amounts include six months of prepetition interest....

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