S&P: CKE Restaurants view negative

Standard & Poor's said it revised its outlook on CKE Restaurants Inc. to negative from stable and affirmed all its ratings, including the BB- corporate credit rating.

S&P also affirmed the bank loan and recovery ratings on the issuer's $470 million senior secured credit facility, which consists of a $270 million term loan and $200 million revolving credit facility. The company recently upsized its term loan by $100 million to $270 million due 2013 and used the proceeds to pay down borrowing on a revolving credit facility due 2012.

The credit facility is rated BB+, two notches higher than the corporate credit rating, with a recovery rating of 1, indicating the expectation of 90% to 100% recovery.

The outlook change reflects the CKE's recent use of debt to fund share repurchases, according to S&P.

The ratings reflect the company's relatively small size in the highly competitive restaurant industry and an aggressively leveraged capital structure, the agency said.

Offsetting the risks somewhat is the generally better operating performance over the past few years, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.