S&P affirms Dunkin' Brands

Standard & Poor's said it affirmed the B- corporate credit rating and B+ secured debt rating of Dunkin' Brands Inc. after the company announced its plans to increase the size of its proposed term loan B to $850 million from $700 million. The outlook is negative.

Proceeds from the these bank facilities will be used to finance the acquisition of Dunkin' by Bain Capital Partners LLC, The Carlyle Group and Thomas H Lee Partners LP and for general corporate purposes.

Ratings reflect Dunkin's very highly leveraged capital structure, thin cash flow protection measures, narrow product focus and participation in the intensely competitive quick-service sector of the restaurant industry, the agency said. Furthermore, S&P predicted that the investor group will fund $1.5 billion of their $2.4 billion acquisition of Dunkin' with debt. After the transaction, the company's leverage will be more than 8.5x.

The ratings are supported by Dunkin' second-largest position in the $12.7 billion U.S. prepared coffee market and leading position in the $5.6 billion donut sector of the U.S. restaurant industry. It holds a 2.1% share in the overall quick-service restaurant industry.

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