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S&P rates CBRL loans BB+
Standard & Poor's said it assigned a BB+ rating to CBRL Group Inc.'s $1.25 billion secured credit facility, which consists of a $250 million revolving credit facility due 2011, $800 million term loan B and $200 million delayed-draw term loan due 2013, and placed the rating on CreditWatch with negative implications. The company's BB+ corporate credit and senior unsecured ratings remain on CreditWatch with negative implications.
Proceeds from the term loan will be used to finance a modified Dutch auction tender offer to purchase up to $800 million of common stock.
S&P said the debt-financed share repurchase represents a more aggressive financial policy. In addition, the proposed initial public offering of subsidiary Logan's Roadhouse Inc. modestly increases business risk as the company provided concept diversity and was CBRL's growth vehicle.
If CBRL repurchases $800 million of stock, pro forma total debt to trailing-12-months EBITDA ended Jan. 31 will rise to about 4.4x from 1.9x currently.
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