Aug. 21 at 9:08 PM
$FOSL Stock px getting beat down on a downgrade by S&P Global. Somewhat understandable given the threat to go to English Courts if 90% of noteholders don't consent. However, the majority of noteholders have already consented and Ares just did a new
$150M LOC to August of 2030. They are good lenders. The new notes due 2029 will refi the 7.0% notes at 7.5%, minimal interest cost increase. Balance sheet and capital structure are no where near default, and profitability / FCF have turned the corner to positive. No defending the threat to use English Courts - it was probably done to keep some note holders from using the maturity to hold FOSL hostage and jack up the rate on the new notes. From a credit quality perspective, the downgrade to default is absolute BS. Whatever the strategy, FOSL is doing it with the consenting note holders and ARES, which means there is likely a small group of existing note holders threatening not to consent unless the rates on the new notes are jacked up.
