S&P cuts O'Charley's

Standard & Poor's said it lowered O'Charley's Inc.'s corporate credit rating to B+ from BB- and its senior secured credit facility to BB from BB+ and its subordinated notes to B- from B.

The outlook is stable.

S&P said the downgrade reflects the strong possibility that the sales and profitably declines in the past three quarters, which have weakened the company's credit metrics, will continue through the balance of the year and likely into 2009.

Ratings reflect the company's highly leveraged capital structure, weak cash flow protection and the fact that the casual-dining restaurant industry has been vulnerable to weak consumer spending, increased competition and cost pressures, the agency said.

Operating lease-adjusted debt-to-EBITDA ratio rose to 4.2 times from 3.6 times since the end of 2007.

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