S&P cuts Sagittarius Restaurants

Standard & Poor's said it lowered the corporate credit rating on Sagittarius Restaurants LLC to CC from CCC. This action comes after the company disclosed that its subordinated lender agreed to reduce its claim substantially below face value, S&P said, adding that the reduction is viewed as a default, given the current distressed financial condition of the company and since the investor is receiving less than the original promise of the original security.

The agency said it assigned a B rating and 3 recovery rating to the company's proposed $195 million senior secured credit facilities consisting of a $160 million term loan and a $35 million revolving credit facility. The 3 recovery indicates an expectation of 50% to 70% recovery in the event of default.

Consequently, upon successful completion of the proposed debt restructuring, the agency said it expects to lower the corporate credit rating to selective default.

After lowering that to selective default, S&P said it expects to raise the corporate credit rating to B, reflecting its improved credit profile.

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