S&P cuts Weight Watchers, loans

Standard & Poor's said it lowered its corporate credit rating on Weight Watchers International Inc. to B+ from BB-.

At the same time, the agency lowered its issue-level ratings on Weight Watchers' senior secured revolving credit and term facilities to BB- (one notch higher than the corporate credit rating on the company) from BB. The recovery rating on these facilities is 2, indicating an expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default.

Additionally, all ratings on the company were placed on CreditWatch with negative implications.

"The downgrade reflects our revised forecast for Weight Watchers, which continues to struggle with declining enrollment and revenues," S&P credit analyst Linda Phelps said in a news release. "We now forecast the ratio of debt to EBITDA could approach 6x in 2014. We estimate this ratio was in the high-4x area in 2013."

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