“The contemplated transactions reflect a fairly desperate situation,” said Carol Levenson, director of research at research firm Gimme Credit. “The need to amend the credit facility to be able to borrow to refinance a bond maturity is not the sign of healthy liquidity.”
“Kohl’s will be buying time at the end of all this by refinancing its July maturity, but it is encumbering additional assets and will still owe a considerable amount to its banks,” said Levenson. Unsecured debt holders will also be disadvantaged, as they will be pushed down the capital structure as a result of this latest deal, she said.