S&P lowers Enterprise Inns

Standard & Poor's said it lowered the long-term corporate credit rating on Enterprise Inns plc to B+ from BB- and the senior secured debt rating on its five public bond issues to BB from BB+. The recovery rating of 1 is unchanged, reflecting expectation of 90% to 100% recovery.

"The downgrades reflect [the company's] higher solo and consolidated adjusted leverage in the year to Sept. 30, 2010, and our view that, despite ongoing disposal-funded debt repayments, ETI's credit metrics will remain above levels that we consider commensurate with the former ratings for some time," S&P analyst Philip Temme said in a statement.

"It also reflects ETI's tight headroom under its banking covenants, reliance on ongoing disposal proceeds to meet debt amortizations, the threat of a future dividend lock-up at its Unique Pub Finance Co. plc securitization materially reducing solo earnings, as well as rising lease liabilities as a result of sale-and-leasebacks."

The company's adjusted group net debt-to-EBITDA ratio rose to 8.4x on Sept. 30, from 8.1x a year earlier.

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