Research Update: Franchise Group Inc. Downgraded To ?CCC+? From ?B-? On Weak Performance And Covenant Breach Risk; Outlook Negative - S&P Global Ratings’ Credit Research

Research Update: Franchise Group Inc. Downgraded To ?CCC+? From ?B-? On Weak Performance And Covenant Breach Risk; Outlook Negative

Research Update: Franchise Group Inc. Downgraded To ?CCC+? From ?B-? On Weak Performance And Covenant Breach Risk; Outlook Negative - S&P Global Ratings’ Credit Research
Research Update: Franchise Group Inc. Downgraded To ?CCC+? From ?B-? On Weak Performance And Covenant Breach Risk; Outlook Negative
Published Jul 24, 2024
6 pages (2581 words) — Published Jul 24, 2024
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About This Report

  
Abstract:

Franchise Group Inc.'s (FRG) operating results have been persistently weak, with declines in EBITDA and free operating cash flow amid a pressured lower-income consumer. Therefore, we lowered our rating on FRG to 'CCC+' from 'B-'. We lowered our issue-level rating on the company's first-lien term loan to 'B-' from 'B'. Our recovery rating remains '2', indicating our expectation of meaningful (70%-90%; rounded estimate: 70%) recovery in the event of a default. We also lowered our issue-level rating on the company's second-lien term loan to 'CCC-' from 'CCC'. Our recovery rating remains '6', indicating our expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of a default. The negative outlook reflects our view that FRG's capital structure appears to

  
Brief Excerpt:

...- Franchise Group Inc.'s (FRG) operating results have been persistently weak, with declines in EBITDA and free operating cash flow amid a pressured lower-income consumer. - Therefore, we lowered our rating on FRG to '###+' from 'B-'. - We lowered our issue-level rating on the company's first-lien term loan to 'B-' from 'B'. Our recovery rating remains '2', indicating our expectation of meaningful (70%-90%; rounded estimate: 70%) recovery in the event of a default. - We also lowered our issue-level rating on the company's second-lien term loan to '###-' from '###'. Our recovery rating remains '6', indicating our expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of a default. - The negative outlook reflects our view that FRG's capital structure appears to be unsustainable, with elevated risk of a covenant breach absent an equity cure or amendment given the Conn's bankruptcy announcement today....

  
Report Type:

Research Update

Ticker
FRG
Issuer
Franchise Group Inc.
GICS
Specialty Stores (25504040)
Sector
Global Issuers
Country
United States
Region
United States
Format:
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Cite this Report

  
MLA:
S&P Global Ratings’ Credit Research. "Research Update: Franchise Group Inc. Downgraded To ?CCC+? From ?B-? On Weak Performance And Covenant Breach Risk; Outlook Negative" Jul 24, 2024. Alacra Store. May 06, 2025. <http://www.alacrastore.com/s-and-p-credit-research/Research-Update-Franchise-Group-Inc-Downgraded-To-CCC-From-B-On-Weak-Performance-And-Covenant-Breach-Risk-Outlook-Negative-3219310>
  
APA:
S&P Global Ratings’ Credit Research. (). Research Update: Franchise Group Inc. Downgraded To ?CCC+? From ?B-? On Weak Performance And Covenant Breach Risk; Outlook Negative Jul 24, 2024. New York, NY: Alacra Store. Retrieved May 06, 2025 from <http://www.alacrastore.com/s-and-p-credit-research/Research-Update-Franchise-Group-Inc-Downgraded-To-CCC-From-B-On-Weak-Performance-And-Covenant-Breach-Risk-Outlook-Negative-3219310>
  
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