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Moody's lowers Real Mex notes, rates new notes B3
Moody's Investors Service said it lowered Real Mex Restaurants, Inc.'s $105 million second-lien senior secured notes due April 2010 to B3 (LGD2, 26%) from B2 (LGD2, 20%), assigned a provisional B3 (LGD2, 26%) rating to the company's proposed second-lien senior secured notes issuance and affirmed the corporate family and probability-of-default ratings at Caa2 and the speculative-grade liquidity rating at SGL-4.
The outlook was revised to developing from negative.
The company intends to apply most of the proceeds from the $110 million offering to repay the existing second-lien notes.
The agency said the developing outlook reflects the likely improvement in liquidity and reduction in near-term default risk if the refinancing is consummated.
Conversely, if the transaction does not occur as proposed, Real Mex's ratings will likely face significant downward pressure due to the mounting refinancing risk, Moody's said.
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