S&P gives California Pizza, loans CCC+

S&P said it assigned CCC+ ratings to California Pizza Kitchen Inc., its $127 million exit first-lien term loan facilities and its $50 million second-lien exit term loan. The 3 recovery rating on the first-lien loan indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 60%). The 6 recovery rating on the second-lien loan indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%).

The company recently emerged from bankruptcy. The CCC+ rating and negative outlook reflect our view that CPK’s capital structure may be unsustainable over the long term,” S&P said in a press release.

The outlook is negative. “The negative outlook reflects our expectation that CPK’s performance will remain uneven through fiscal year 2021 with significant uncertainty surrounding the pace of its sales and EBITDA recovery. We also expect sustained high leverage and weak cash flows,” the agency said.

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