S&P cuts Logan's Roadhouse, notes to CCC

Standard & Poor's said it lowered its corporate credit rating on Logan's Roadhouse Inc. to CCC from B-.

All ratings were removed from CreditWatch, where they were placed with negative implications on Nov. 21 to reflect the company's declining liquidity and looming debt maturity on its revolving credit facility.

The outlook is negative.

At the same time, the agency lowered the issue-level rating on Logan's $355 million senior secured notes to CCC from B-. The 3 recovery rating remains unchanged, reflecting an expectation for meaningful (50%-70%) recovery in the event of a payment default.

"The downgrade reflects our view that the company's capital structure is unsustainable and its weak operating performance will likely persist over the next 12 months, resulting in the company’s continued dependence on its revolver to make interest payment obligations. The company had negative free cash flow for the past three years, and we don’t expect any improvement in the near-term despite the management’s efforts to cut costs. Logan’s remains challenged in reversing negative guest traffic and same-store sales trends as it deviates from its deep discounting strategy," S&P credit analyst Samantha Stone said in a news release.

"Our ratings reflect a ‘vulnerable’ business risk profile, which we revised from ‘weak’ to reflect the company’s weakened competitive position relative to peers."

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