Moody's may cut Wendy's

Moody's Investors Service said it placed the ratings of Wendy's International, Inc. on review for possible downgrade following an announcement by its parent company - Wendy's/Arby's Group, Inc. - that it intends to combine the credit facilities of Wendy's and Arby's Restaurant Group, Inc. under a single credit agreement.

According to the agency, Wendy's and Arby's are wholly-owned subsidiaries of Wendy's/Arby's Group, Inc. and are currently financed on a standalone basis with separate credit agreements.

Moody's said that the following ratings were placed on review for possible downgrade: corporate family rating at B1, probability of default rating at B1, $200 million senior secured revolving credit facility expiring 2011 at Ba1 (LGD1, 9%), $100 million 7% senior unsecured notes due 2025 at B2 (LGD4, 63%), $225 million 6.2% senior unsecured notes due 2014 at B2 (LGD4, 63%) and $200 million 6.25% senior unsecured notes due 2011 at B2 (LGD4, 63%).

The review for downgrade reflects Moody's concern that the proposed financial structure will directly link Wendy's to its financially weaker sister company - Arby's.

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