S&P upgrades GameStop to 'B' from 'B-,' takes ratings off watch - InvestingChannel

S&P upgrades GameStop to ‘B’ from ‘B-,’ takes ratings off watch

S&P Global Ratings raised its issuer credit rating on GameStop to “B” from “B-” and removed the ratings from CreditWatch, where it placed them with positive implications on April 5.” The upgrade reflects our view of reduced financial risk following the $550 million gross equity issuance and redemption of $216 million secured notes. We expect performance to improve in 2021 following weak operating results in 2020. We associate that with the coronavirus pandemic and the cyclical effects of an elongated video game console release cycle giving way to pent-up demand. Our view also considers its recent equity issuance and debt repayment, and solid credit protection measures. We expect low adjusted leverage of less than 2x with all adjusted debt compromising operating lease obligations. The equity offering provides additional liquidity, which we believe will partially fund its transformational efforts. These actions come amid significant management turnover and continued long-term operational risks because of changing technologies and customer habits in the video game industry. Despite these risks, we revised our financial risk profile to intermediate from aggressive given the reduction in debt. We expect significant growth in sales and adjusted EBITDA this year following volatile performance in 2020,” S&P stated.