Moody's rates HOA, notes B3

Moody's Investors Service said it assigned HOA Restaurant Group, LLC B3 corporate family and probability of default ratings and its proposed $165 million of guaranteed senior secured second-lien notes due 2018 a B3 (LGD 3, 48%) rating.

The outlook is stable.

Proceeds from the proposed note offering will be used to re-finance existing debt.

HOA's ratings reflect its high leverage and relatively weak interest coverage, as well as the company's modest level of revenues and earnings and narrow customer demographic, the agency said.

The ratings also reflect HOA's reasonable scale in regards to number of restaurants, good brand awareness, relatively stable earnings stream and adequate liquidity, the agency added.

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