S&P rates Denny's loan, notes

Standard & Poor's said it assigned its B rating and 3 recovery rating to Denny's Corp.'s proposed $275 million senior secured bank loan, comprising a $200 million term loan and a $75 million revolving credit facility. At the same time, a CCC+ rating and a recovery rating of 5 were assigned to the company's proposed $100 million second-lien term loan.

In addition, a CCC+ rating was assigned to Denny's proposed $220 million senior unsecured note offering.

Existing ratings on Denny's, including the CCC+ corporate credit rating, were affirmed. The outlook is developing.

Proceeds from the proposed offerings will be used to redeem the company's 12.75% and 11.25% senior unsecured notes. The company already used proceeds from its recent equity investment to pay down its current bank loan.

Upon completion of the $275 million bank loan, S&P said it will raise the corporate credit rating to B from CCC+. The outlook will be stable.

S&P said the ratings reflect the challenges of improving operating performance in the highly competitive restaurant industry, weak cash flow protection measures, and a significant debt burden.

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