S&P affirms Michelina's

Standard & Poor's said it affirmed the B+ corporate credit and senior secured bank loan ratings of Michelina's Inc. (formerly known as Luigino's Inc.) and removed them from CreditWatch, where they were placed on Sept. 9, 2005, with developing implications. The outlook is negative.

The CreditWatch placement followed the company's announcement that it was exploring a potential sale of the company. The ratings were removed from CreditWatch because management said it is no longer actively marketing the company for sale.

S&P said the ratings on Michelina's continue to reflect its moderately high debt levels, narrow product portfolio and the highly competitive frozen-entrée category in which the company competes.

Financial credit measures are appropriate for the rating given the company's vulnerable business risk profile, the agency said. Rolling 12-month lease-adjusted EBITDA coverage of interest expense for the period ended Jan. 1 declined slightly to 3.9x from 4.3x at fiscal 2004, and lease-adjusted total debt to EBITDA declined to 3.7x from 4.2x during the same period.

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