S&P: Landry's still on watch

Standard & Poor's said it announced that while the ratings on Landry's Restaurants Inc. will remain on CreditWatch with negative implications, where they were placed on Jan. 28, the agency said it would affirm the B corporate credit rating on Landry's in the event that Tilman Fertitta's offer to purchase Landry's outstanding common stock at $21 a share is consummated.

S&P added that it would also affirm the ratings, including the B corporate credit rating, on the company's unrestricted subsidiary, Golden Nugget Inc.

The outlook on both would be stable.

S&P noted that these potential rating actions assume that Landry's current outstanding credit agreement and unsecured notes will be refinanced as part of the transaction and the company would obtain financing through a $300 million senior secured credit facility, consisting of a $250 million term loan and a $50 million revolving credit facility, and $315 million of senior secured second-lien notes.

The agency said it assumed that there would not be borrowings on the revolver at closing.

The current capital structure at Golden Nugget will not likely be affected by the transaction, S&P said, adding that the rating on the company's term loan would be BB-, two notches above the corporate credit rating on Landry's, with a recovery rating of 1 while the rating on the second-lien notes would be B, the same as the corporate credit rating, with a 4 recovery rating.

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