S&P rates BKH Acquisition

Standard & Poor’s said it assigned a B- corporate credit rating to BKH Acquisition Corp.

The outlook is negative.

The agency also said it affirmed the B- ratings on the company’s $10 million revolver and $142.2 million first-lien term loan. The recovery rating is 3, indicating 50% to 70% expected default recovery.

S&P also said it affirmed the CCC rating on the company’s $50 million second-lien term loan. The recovery rating is 6, indicating 0 to 10% expected default recovery.

The agency said it previously withdrew the B- corporate credit rating on subsidiary Caribbean Restaurants LLC.

BKH’s business risk profile reflects its concentrated operations of Burger King restaurants in economically challenged Puerto Rico, participation in the overall intensely competitive quick-service restaurant environment and limited brand diversity, S&P said.

Although BKH enjoys leading market share position in Puerto Rico, the company closed two Burger King stores per year since 2014 and now projects closing two- to three-restaurants per year going forward, the agency said.

The ratings also consider the company’s ability to maintain its leading quick-service restaurant market share and proactively manage its costs over the coming year, S&P said.

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