S&P assigns B- to Nathan’s CCR, notes

Standard & Poor's said it assigned its B- corporate credit rating to Nathan's Famous Inc.

The outlook is stable.

Concurrently, the agency assigned a B- issue-level rating to the company's new $125 million senior secured notes with a 3 recovery rating, indicating an expectation for meaningful (50%-70%) recovery in the event of a payment default.

Proceeds will be used to pay a special dividend to shareholders, fund cash to the balance sheet and pay fees and expenses for the transaction.

"The rating on Nathan's reflects its position as a very small player in the highly competitive restaurant and packaged food space with a niche focus on hot dogs," S&P credit analyst Diya Iyer said in a news release.

"Though it is the top premium hot dog brand in certain channels ahead of no. 2 Hebrew National, the company's position is among the smallest of all rated quick-service restaurants. Additionally, we factor in risks related to minimum wage increases, a high concentration of operations in the Northeast U.S., and exposure to beef prices that have been increasing rapidly in recent years, with further modest increases expected in fiscal 2015 and 2016."

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