Moody’s shifts GPS Hospitality view to stable

Moody’s Investors Service said it changed the outlook to stable from negative and affirmed the Caa1 corporate family rating and Caa1-PD probability of default rating of GPS Hospitality Holding Co. LLC. Also, Moody’s affirmed GPS’ Caa1 senior secured bank facility ratings.

“The affirmation and change in outlook to stable from negative reflect that we expect the gradual improvement in same-store sales to continue which will help drive higher earnings and result in lower leverage, improved coverage and stronger liquidity over time despite ongoing government restrictions,” stated Bill Fahy, a Moody’s senior credit officer, in a press release.

“However, the ratings and outlook also consider the company’s current high leverage and weak interest coverage with an inability to cover interest expense on an EBIT basis due in part to a material level of cash interest expense related to the company’s preferred stock,” Fahy added.

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