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S&P changes Wagamama view
S&P said it revised its outlook on Mabel Topco Ltd., the parent of Wagamama, to negative from stable.
The agency also affirmed the B long-term issuer credit rating on Mabel Topco.
At the same time, the agency affirmed the B issue rating on the £225 million 4 1/8% senior secured notes due July 2022 issued by Wagamama Finance plc.
The recovery rating remains at 4, indicating an expectation of average (30%-50%) recovery prospects in the event of a payment default. However, S&P revised upward its rounded estimate to 40% from 35% previously.
The agency said the outlook revision reflects the continued margin pressure that Wagamama is experiencing in the context of continuous rising cost pressures in the U.K. casual dining segment, primarily due to increasing national living wage, food and drinks costs and utilities expenses.
The cost increases are weighing on the group's EBITDA growth and free operating cash flow generation that underpin the current ratings, S&P said.
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