Moody's downgrades Checkers

Moody's Investors Service said it downgraded Checkers Holdings, Inc.'s probability of default rating to Ca-PD/LD, its corporate family rating to Ca from Caa2 and its senior secured bank credit facility to Caa3 from Caa1.

“The downgrades follow the expiration of the grace period related to Checkers’ missed principal payments on its $19.9 million restatement date senior secured first-lien term loan and $5.1 million senior secured first-lien revolving credit facility that were due April 25, 2023. The limited default LD designation appended to Checkers' PDR reflects that the missed payments constitute a default under Moody's definition, despite Checkers entering into a forbearance agreement. The limited default designation will remain until the company resolves the missed payments,” the agency said in a press release.

Checkers also needs to refinance a first-lien term loan due April 2024 and a second-lien term due April 2025.

Concurrently, the agency changed the outlook to negative from stable. The outlook reflects Checkers' weaker liquidity with currently due term loan maturities and approaching 2024 maturity, as well as very high leverage.

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