Research Update: Dutch Retailer Hema B.V. Outlook Revised To Negative On Business Transformation And Elevated Leverage; Affirmed At 'B-'

Dutch retailer Hema B.V.'s current credit metrics do not meet our expectations for the current rating, following weak trading in 2018, with extraordinary costs and working capital outflows having also eroded its liquidity position. Although we think Hema's planned redemption of remaining payment-in-kind (PIK) notes reflects the new owner's high commitment to the group and its deleveraging target, we see certain execution risks during the transformative period and establishment of wholesale cooperation with other retailers. We are therefore revising our outlook on Hema to negative from stable and affirming our 'B-' long-term ratings on Hema and its senior secured notes. We are maintaining the recovery rating on the notes at '4'. We are also affirming our ratings on the super

...- Dutch retailer Hema B.V.'s current credit metrics do not meet our expectations for the current rating, following weak trading in 2018, with extraordinary costs and working capital outflows having also eroded its liquidity position. - Although we think Hema's planned redemption of remaining payment-in-kind (PIK) notes reflects the new owner's high commitment to the group and its deleveraging target, we see certain execution risks during the transformative period and establishment of wholesale cooperation with other retailers. - We are therefore revising our outlook on Hema to negative from stable and affirming our 'B-' long-term ratings on Hema and its senior secured notes. We are maintaining the recovery rating on the notes at '4'. We are also affirming our ratings on the super senior secured revolving credit facility (RCF) at 'B+' and on the senior unsecured notes at '###', and maintaining the recovery ratings at '1' and '6', respectively. - The negative outlook points to a possible...

Research Update