S&P ups Denny's

Standard & Poor's raised its corporate credit rating on Denny's Corp. to CCC+ from CCC-.

The outlook is developing.

S&P said the rating action follows the company's announcement that it has obtained about $92 million of equity financing which will be used to reduce debt.

The ratings reflect the challenges of improving operating performance in the highly competitive restaurant industry, weak cash flow protection measures and a significant debt burden, S&P said.

Pro forma for the transaction, the company is still very highly leveraged, with lease-adjusted total debt to EBITDA of 5.5x, compared with 6.3x under the previous capital structure. Cash flow protection measures are very thin, with lease-adjusted EBITDA covering interest by 1.3x for the 12 months ended March 31, 2003.

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