S&P lowers Enterprise Inns

Standard & Poor's said it lowered its long-term corporate credit rating on Enterprise Inns plc to B from B+.

At the same time, the agency said it lowered the issue ratings on the company's five senior secured bonds to BB- from BB. The recovery rating of 1 on these bonds is unchanged, reflecting an expectation of very high recovery for senior secured lenders in the event of a payment default.

S&P said the downgrades reflect an increase in the company's consolidated S&P-adjusted leverage in the financial year to Sept. 30, and S&P's view that the company's liquidity position is under pressure despite ongoing disposal-funded debt repayments.

The agency said the downgrades also reflect the tight headroom under Enterprise Inns' bank covenants, the threat of a future dividend lock-up at the company's Unique Pub Finance Co. plc securitization materially reducing Enterprise Inns' solo earnings, as well as rising lease liabilities as a result of sale-and-leasebacks.

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