June 23 - Moody's Investors Service has today placed ESCADA AG ("ESCADA") Corporate Family Rating of B2 and the senior unsecured rating on the notes due 2012 of B2 on review for possible downgrade. The rating action follows the company's second profit warning announcement over the last two months and follows the ratings downgrade by one notch on the 15th of May 2008.
On the 20th of June 2008 ESCADA announced that following significant revenues drop at its BiBa retail chain during the period from February to April, the company is reviewing its EBITDA target for the current FYE October 2008 to EUR37 million, which compares unfavourably to the EUR51 million announced in early April and to the EUR68.2 million reported at FYE October 2007. Along with the extremely rapid deterioration suffered by the company's profitability, Moody's notes that the company is still negotiating its existing bank facility.
Moody's review will focus on (i) the company's line of actions to restore the operating performances at core businesses, (ii) the capability to refinance a new bank facility to replace the existing EUR90 million facility maturing in December 2008, (iii) the company's capability to secure proper financing needed to restructure the business and to invest in the day to day activity, and (iv) the expected credit profile going forward to monitor whether this will remain supportive of the business risk profile of the company. The following ratings have been placed under review for possible downgrade: Corporate Family Rating of B2; Senior Unsecured Rating on the EUR200 million notes due 2012 of B2 (LGD3, 49%).
ESCADA, headquartered in Munich, is one of the leading European manufacturers and distributors of ready-to-wear luxury apparel for women. In the financial year ended 31 October 2007, the company reported consolidated sales of EUR686 million and EBITDA of EUR68.2 million. (New York Ratings Team)