S&P: O'Charley's outlook negative

Standard & Poor's said it revised its outlook on O'Charley's Inc. to negative from stable. The long-term corporate credit rating is BB-.

The change in outlook reflects a significant decline in operating performance in the fourth quarter and the agency's expectations that those trends will likely continue given the very difficult operating environment facing casual dining restaurants.

S&P said it also considered in the outlook change the possibility that the company would adopt more aggressive and shareholder-friendly financial policies as a result of expanding its board and appointing representatives from Crescendo Partners, a large shareholder. However, certain covenants of the company's senior secured credit facility and subordinated notes limit the likelihood of significant debt-financed dividends or share repurchases, the agency noted.

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