S&P lowers Vicorp

Standard & Poor's said it lowered its ratings on Vicorp Restaurants Inc., including the corporate credit rating, to B- from B.

At the same time, the agency said it also lowered the rating on the senior unsecured notes to CCC+ from B-, adding that the notes are rated one notch lower because of the significant amount of priority debt ahead of the unsecured notes.

The downgrade reflects continued erosion in the company's credit measures during 2006, as margins and EBITDA deteriorated because of declines in same-store sales and negative leveraging from higher labor, manufacturing and other costs, S&P added.

The outlook is negative.

S&P noted that the ratings on Vicorp reflect the company's participation in the weak family-dining sector of the highly competitive restaurant industry, declining operating trends and a highly leveraged capital structure that results in thin cash flow protection.

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