S&P rates Wendy's/Arby's notes B+

Standard & Poor's said it affirmed the B+ corporate credit ratings of Wendy's/Arby's Group Inc., Arby's Restaurant Group Inc. and Wendy's International Inc. and assigned a B+ corporate credit rating to Wendy's/Arby's Restaurants, LLC, which is a financing subsidiary of Wendy's/Arby's.

The agency also assigned a B+ issue-level rating with a 3 recovery rating to the $550 million proposed senior unsecured notes issuance of the financing subsidiary, lowered the rating on Wendy's outstanding senior unsecured notes to B- with a recovery rating of 6 from B with a recovery rating of 5 and affirmed the BB issue-level rating and 1 recovery rating on Arby's senior secured credit facility.

The outlook was revised to negative from stable.

The proceeds will be used to retire approximately $125 million of outstanding term loan borrowings and to add to cash reserves.

The agency said the lower rating on the existing notes reflects that the new notes will be guaranteed by Arby's and Wendy's, while the existing notes are not guaranteed.

The outlook revision reflects the pro forma increase in the operating lease-adjusted debt-to-EBITDA ratio to 5 times from 4.2 times, S&P said. The agency expects that profitability will be pressured in the near term because of sales and margin declines at Arby's and that leverage could worsen to approximately 5.3 times by the end of third quarter.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.