S&P rates Dunkin' loan B+, notes CCC+

Standard & Poor's said it assigned a preliminary B corporate credit rating to Dunkin' Brands Inc., along with a preliminary B+ rating on its proposed $1.35 billion senior secured credit facility with a preliminary recovery rating of 2, indicating 70% to 90% recovery in a default.

The agency also said it assigned a preliminary CCC+ rating to the company's proposed $625 million senior unsecured notes with a preliminary recovery rating of 6, indicating 0% to 10% recovery in a default.

The new debt will be issued by Dunkin' Finance Corp., with the net cash proceeds being held in escrow accounts until the date the existing debt is repaid, at which time Dunkin' Finance will merge into Dunkin' Brands with Dunkin' Brands being the surviving entity, S&P said.

The outlook is stable.

The ratings reflect an assessment of the company's business risk profile as fair, characterized by its significant recurring revenues due to its highly franchised business model and good market position, the agency said.

The ratings also incorporate a view that while the company's financial risk profile is highly leveraged, the proposed refinancing will help to improve financial flexibility in the medium term by making debt maturities more manageable.

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