S&P lowers Sagittarius outlook to negative

Standard & Poor's said it revised its ratings outlook on Sagittarius Brands Inc. to negative from stable.

At the same time, the agency said it affirmed its ratings, including the B- corporate credit rating, on the company.

The agency added that the change in outlook reflects its view that cost pressures will likely continue to strain operating performance in 2008 and that there is a growing possibility that the company will not comply with financial covenants of its senior secured credit facility.

According to S&P, the ratings on Sagittarius reflect the company's small size in the highly competitive quick-service sector of the restaurant industry, its regional concentration and a very highly leveraged capital structure that limits cash flow protection.

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