S&P reviews Wendy’s for downgrade

Standard & Poor’s said it placed its ratings on Wendy’s Co., including the B+ corporate credit rating, on CreditWatch with negative implications.

"The CreditWatch listing follows the company’s announcement that it will look to recapitalize the company to leverage considerably. The company will target an increase of net debt to EBITDA (as the company calculates the metric) of about two to three turns to between five and six times from its current 3x level. We note that this metric nets out cash against debt and does not adjust for operating lease commitments," S&P Charles Pinson-Rose said in a news release.

"We currently calculate adjusted debt to EBITDA of about 4.4x, and the increase in debt we estimate would lead to adjusted debt to EBITDA between 6.0x and 6.8x. The pro-forma leverage metric would be in line with a ‘highly leveraged’ financial risk profile and not the current ‘aggressive.’"

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