Moody's rates new El Pollo Loco notes B2

Moody's Investors Service said it assigned a B2 rating to the proposed $110 million six-year senior secured note issue of El Pollo Loco Inc.

The company's senior unsecured issuer rating is B3 and senior implied rating is B2.

The outlook is stable.

Moody's said the new senior secured notes, together with proceeds from an unrated $11 million term loan, will be used to refinance the existing bank loan and to pay a $70 million dividend to the equity owners.

While El Pollo Loco restaurants achieve good unit performance and appeal to the quickly growing Hispanic population segment, limiting the ratings are the challenges in growing El Pollo Loco against much larger restaurant competitors and reliance on a single region (the Los Angeles metro area) for most revenue and cash flow, the agency said.

This is the first time that Moody's has rated the debt of El Pollo Loco.

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