DUFF & PHELPS RATES GUESS?, INC.'S PENDING SERIES B SENIOR SUBORDINATED NOTES 'BB-'
NEW YORK, Oct. 11 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a 'BB-' (Double-B-Minus) rating to Guess?, Inc.'s 9 1/2 percent Series B Senior Subordinated Notes due 2003, which are to be exchanged for senior subordinated notes issued under Rule 144A in August, 1993. The Duff & Phelps rating reflects the companies strong operating performance over the last several years, its excellent brand name, the successful growth of licensed products, and Guess' sizable sales of basic merchandise that tend to be less fashion oriented and less seasonal. In addition, the company has a strong distribution network of department and specialty stores, as well as company-owned retail stores and factory outlets. Future growth opportunities are expected in license products and foreign markets. The rating also recognizes the sharp increase in leverage resulting from the purchase of Georges Marciano's 40 percent ownership position in the company, the loss of his management talents, the volatility and competitiveness of the fashion business, and its relatively short ten year operating history in the U.S. Also, significant dividends have been paid to stockholders over the past several years, despite the fact that Guess is a Subchapter S corporation, . The buyout resulted in a debt increase of $210 million and negative book equity. However, pro forma for the issuance of $130 million of senior subordinated notes and a $80 million bridge loan, total debt/EBITDA would be a moderate 1.9x for the latest twelve months ended June 27, 1993. Fixed charges (interest plus 1/3 rents) on a pro forma basis would have been covered 3.5x for the 26 week period ended June 27, 1993 and 4.8x in 1992. Guess?, Inc. is a leading designer, developer and marketer of quality contemporary jeans and other casual wear made of denim and cotton for men and women. The company markets its products under the trademarks Guess and Guess? and Triangle Design. The company also selectively grants licenses to manufacture and distribute a broad range of apparel and other products under the Guess label, including shoes, eyewear, watches, fragrances and other apparel accessories. -0- 10/11/93 /CONTACT: Thomas P. Razukas, CFA of Duff & Phelps Credit Rating Co., 212-908-0200/
CO: Guess, Inc. ST: New York IN: TEX SU: RTG
TM -- NY051 -- 0814 10/11/93 17:24 EDT
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|Date:||Oct 11, 1993|
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