S&P assigns Otis Spunkmeyer loan B+, view up to stable

Standard & Poor's said it assigned a B+ rating and a recovery rating of 3 to Otis Spunkmeyer Inc.'s proposed $192.5 million senior secured credit facility, noting the facility is rated the same as the corporate credit rating.

At the same time, S&P said it changed the outlook to stable from negative. S&P said it also affirmed its B+ corporate credit rating on the company.

The agency said the outlook revision incorporates Otis Spunkmeyer's successful integration of its debt-financed acquisitions in 2004, combined with modest improvement in EBITDA operating margins at 15.0% over the 12 months ended June 30 from 14.2% in fiscal 2004.

S&P noted the ratings reflect Otis Spunkmeyer's high debt leverage, its narrow business focus and the highly competitive industry in which it competes, while mitigating these rating concerns are the company's improved operating performance in the past four quarters, its leading market share in the frozen cookie dough segment and strong brand recognition.

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