Fitch cuts Aramark to junk

Fitch Ratings said it downgraded the issuer default ratings and senior unsecured debt ratings of Aramark Corp. and its wholly owned subsidiary, Aramark Services Inc., to BB- from BBB. The ratings remain on rating watch negative.

According to the agency, Aramark announced on Tuesday that its board of directors agreed to accept a management buyout offer from a group of investors led by chairman and chief executive officer Joseph Neubauer for $33.80 per share in cash, a deal still subject to stockholder approval and regulatory approval. The transaction is to be financed through equity commitments by the investors and by $6.3 billion of debt financing led by Goldman Sachs Credit Partners LP and JP Morgan Securities Inc. The transaction is valued at about $8.3 billion, including the assumption of $2 billion in debt.

Fitch said it believes the ratings could be downgraded further upon closing of the transaction. The resolution of the rating watch will be determined by an evaluation of the ultimate financing of the purchase price, overall mix of securities in the capital structure and free cash flow generating ability of the post-acquired entity.

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