a day ago
Anastasia Beverly Hills' Missed Loan Payment Hits Its Credit Rating
Anastasia Beverly Hills missed a term loan payment on Monday as it seeks to realign its capital structure and paid the price with downgrades to its credit rating from both Standard & Poor's and Moody's Investors Service.
S&P cut the makeup company's ratings to a 'D' from a 'CCC-minus' on Monday, citing the missed principal and interest payment on its $650 million term loan. Anastasia Beverly Hills entered into a forbearance agreement with lenders on July 25 that gave the company some breathing room, but the rating agency still viewed the situation unfavorably.
More from WWD
Inside Beauty's Innovative New Retail Formats
Crocs Beats Q2 Expectations, but Remains Cautious on Q3
All the Beauty Retail Expansions of 2025
'Under the forbearance agreement, the term loan lenders agreed to not exercise certain remedies relating to the nonpayment until Sept. 10, 2025,' S&P Global said. 'We view the transaction as distressed and do not have information on sufficient compensation to lenders for the deferral. In our view, this represents a default on the term loan because Anastasia did not meet its contractual obligation to pay principal and interest in a timely manner.'
Katherine Heng, a consumer analyst at S&P, said that the company had been downgraded twice in 2024 due to its credit facility expiration and the loan reaching maturity.
'We highlighted a higher risk of default back then, and then on Monday we lowered our rating to default,' Heng said. 'The transaction itself is distressed.'
She said S&P would take another look at the rating after the Sept. 10 deadline on the forbearance.
Moody's took similar action on Tuesday, downgrading the firm's corporate family rating to 'Ca' from 'Caa3,' and the probability of default rating 'D-PD' to 'Caa3-PD.' The downgrade from Moody's said the rating has a negative outlook.
'The ratings also incorporate the high likelihood of a debt restructuring or other form of a distressed exchange given the company's very high leverage and ongoing cash flow deficits,' Moody's said. 'ABH's scale remains modest, with revenue below $300 million, and Moody's adjusted debt-to-EBITDA of 11.9x for the 12 months ending March 31, 2025. The company generated negative cash flow and faces intense competition within the beauty industry.'
At the time of its investment from TPG Capital in 2018 — which was said to value the business at as much as $3 billion — the company was believed to have $200 million in earnings before interest, taxes, depreciation and amortization on $340 million in sales.
As of March 31, Anastasia Beverly Hills had only $40 million in cash available after its revolving credit facility expired in May, according to Moody's.
An Anastasia Beverly Hills spokesperson told WWD: 'We are taking steps to align our capital structure with the underlying strength of our business and our resilient operational performance, including entering into a forbearance agreement through Sept. 10, 2025 with our lenders, who we are continuing to work with constructively and amicably. ABH continues to be well positioned for growth, driven by our ongoing innovation, loyal customers, healthy margins and strong market share for our beloved products.'
Best of WWD
The Best Makeup in Grammys History: Kim Kardashian, Miley Cyrus, Cher and More Iconic Red Carpet Looks
A Look Back at Grammys Best Makeup on the Red Carpet: Beyonce, Dua Lipa and More Photos
The Best Eyeliner Brand According to Stacey Bendet, Queen of the Black Smokey Eye
