Moody's affirms Morton's

Moody's Investors Service said it affirmed the B2 rating on the $105 million 7.5% notes due 2010 of Morton's Restaurant Group Inc. (the operating company). At the same time, the senior implied and issuer ratings are now assigned at the holding company level.

The outlook is stable.

The rating actions follow the announcement that Morton's Holding Co. Inc. has placed a $40 million issue of 14.0% senior notes due 2010. Proceeds from the new debt will finance a dividend distribution to the company's equity sponsors.

Moody's said the ratings reflect the company's relatively high financial leverage (especially when adjusted for operating lease obligations) and low fixed-charge coverage, the high level of competition in the white-tablecloth segment of the restaurant industry, and the dependence on corporate budgets for travel and entertainment.

However, Moody's expectation that the company's continuing operating progress will improve financial flexibility and "Morton's" established position as a chain of high-end steakhouses support the ratings.

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