Kohl's Corporation has revealed the pricing of a private offering of $360 million in senior secured notes, aiming to enhance its financial position. This move involves issuing debt backed by the company's assets, providing lenders with greater security in the event of default. This strategic step is intended to give Kohl's the financial flexibility needed to better manage its debt and continue supporting its operations.
In January 2023, Kohl's made a significant change by entering into a $1.5 billion senior secured, asset-based revolving credit facility. This facility replaced its previous unsecured credit setup and secured all of Kohl's assets, excluding real estate, as a way to gain more financial leeway. However, credit rating downgrades by agencies such as Standard & Poor's and Moody's led to increased interest rates on its existing notes due to coupon adjustment provisions, as reported by Fintel.io.
The issuance of the new secured notes aligns with Kohl's ongoing efforts to manage its debt portfolio more actively. This includes repurchasing higher-coupon debt to reduce future interest expenses, according to a report by The Motley Fool. Through these financial maneuvers, Kohl's aims to solidify its financial standing while navigating challenges in the retail sector.
