S&P rates Buffets loan B+

Standard & Poor's said it assigned its B+ rating, along with a recovery rating of 4, to Buffets Inc.'s amended and restated $310 million bank loan. At the same time, S&P affirmed its outstanding ratings on Buffets, including the B+ corporate credit rating, and removed them from CreditWatch.

The outlook is negative.

Proceeds will be used to refinance the company's existing credit facility, repurchase $50 million of its senior subordinated notes, and/or repay bank debt, and redeem $18.6 million of Buffets Holdings' senior subordinated notes.

S&P said the ratings on Buffets reflect the company's participation in the highly competitive restaurant industry, poor operating performance, weak cash flow protection measures, and a highly leveraged capital structure. These factors are somewhat offset by the company's established market position in the buffet/cafeteria segment of the restaurant industry.

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