Research Update: Rodan&Fields LLC Downgraded To 'CCC' From 'CCC+' On Legal Settlement And Refinancing Risk; Outlook Negative

Rodan&Fields LLC's (R+F) announced a preliminary approval of a Lash Boost settlement that included a $30 million cash fund and a $8 million credit fund for product vouchers. We believe this will further decreases the company's already less-than-adequate liquidity. It also faces near-term refinancing risk as its revolver becomes current in June 2022. We lowered our issuer credit rating to 'CCC' from 'CCC+' because we believe a default due to a balance sheet restructuring (including a potential debt repurchase below par) or liquidity crisis (including a covenant breach) is likely without unforeseen positive developments within the next 12 months. Concurrently, we lowered our issue-level ratings on the company's first lien credit facility including its first lien revolving facility

...- Rodan & Fields LLC's (R+F) announced a preliminary approval of a Lash Boost settlement that included a $30 million cash fund and a $8 million credit fund for product vouchers. We believe this will further decreases the company's already less-than-adequate liquidity. It also faces near-term refinancing risk as its revolver becomes current in June 2022. - We lowered our issuer credit rating to '###' from '###+' because we believe a default due to a balance sheet restructuring (including a potential debt repurchase below par) or liquidity crisis (including a covenant breach) is likely without unforeseen positive developments within the next 12 months. - Concurrently, we lowered our issue-level ratings on the company's first lien credit facility including its first lien revolving facility due 2023 and the term loan due 2025 to '###+' from 'B-'. The '2' recovery rating on the term loan reflects our expectation of substantial (70-90%; rounded: estimate 70%) recovery in the event of a payment...

Research Update