Moody's cuts Enterprise Inns

Moody's Investors Service said it downgraded Enterprise Inns plc corporate family rating to B2 from B1, the probability of default rating to B3 from B2 and the rating on its £275 million senior secured floating-rate notes due 2031 to Ba3 from Ba2.

The corporate family rating is assigned to the unconsolidated parent company.

The outlook is negative.

The downgrade reflects the deterioration in Enterprise Inns' consolidated credit metrics, notably higher leverage and lower fixed-charge coverage, Moody's said.

The distressed United Kingdom pub industry has yet to recover in light of a sluggish economic recovery and weak consumer spending, the agency said.

The company's liquidity remains fragile as the company must amortize £251 million of bank debt by Dec. 31, 2012, Moody's said, but does not generate sufficient free cash flow to meet the repayment schedule and continues to rely on the net proceeds of its ongoing asset sales program.

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