Moody's affirms Otis Spunkmeyer, view up to positive

Moody's Investors Service said it affirmed the B1 senior secured and B1 corporate family rating for Otis Spunkmeyer, Inc. and changed the outlook to positive from stable.

This outlook change follows Otis' announcement that it would undertake an initial public offering of its shares and use proceeds to reduce high cost debt and redeemable preferred stock, the agency said.

Affirmed ratings include the company's $22.5 million senior secured revolving credit facility at B1 and $170 million senior secured term loan maturing 2012 at B1.

Given the positive outlook, the agency said it does not expect Otis' ratings to be downgraded in the near-to-intermediate term, adding that over time, ratings could be pressured if the company's operating performance declines, credit metrics weaken or it is unable to bring debt/EBITDA below 5 times.

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