S&P may cut Burger King

Standard & Poor's said it placed the BB- corporate credit rating on Burger King Corp., a subsidiary of Burger King Holdings Corp., on Credit Watch with negative implications.

The negative watch comes after the company entered into a deal with 3G Capital under which an affiliate of 3G will purchase all of the stock of the company at $24.00 per share, including the assumption of the company's debt, S&P said. Total considerations will amount to about $4 billion.

Under terms of the agreement, 3G expects to commence a tender offer of all the outstanding shares no later than Sept. 17. The agreement also stipulates the about 79.1% of the company's common shareholders must tender their shares, but affiliates of TPG Capital LP, Goldman Sachs Capital Partners and Bain Capital Investors, which own about 31% of the company's outstanding shares, have agreed to tender their shares, S&P said.

This increases the likelihood of the transaction being consummated, the agency said. JPMorgan Chase Bank and Barclays Capital agreed to provide the debt financing necessary to close the transaction, S&P added.

While the financing terms of the debt financing have not been announced, S&P said it believes this debt-financed buyout will increase the company's financial risk.

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