Moody's rates CKE Restaurants SGL-3

Moody's Investors Service said it assigned an SGL-3 speculative-grade liquidity rating to CKE Restaurants Inc. and affirmed all ratings, including the B3 corporate family rating.

The outlook remains negative.

Over the next 12 months, the agency expects CKE will generate negative free cash flow as sizeable capital expenditures and dividend payments are likely to exceed internal operating cash generation. Moody's also believes the cushion under the company's bank covenant will be modest as operating performance is not likely to materially improve and covenants step down in the first quarter of fiscal year 2010.

However, the agency also believes internal cash flow should comfortably cover working capital and maintenance capital expenditures.

As of May 19, CKE had $19 million of unrestricted and $17 million of restricted cash on its balance sheet and about $103 million of availability under its $200 million revolver credit facility, Moody's said.

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