S&P rates Arby's loans B

Standard & Poor's said it assigned a B corporate credit rating to ARG IH Corp., whose subsidiaries operate and franchise Arby's restaurants.

The agency also said it assigned a B rating and 3 recovery rating to the company's proposed $335 million term loan and $35 million revolving credit facility.

The proceeds will be used to fund a dividend to the equity holders. The company will also fund a small portion of the dividend with excess cash to pay fees associated with the transaction.

The ratings reflect the company's vulnerable business risk profile, which is primarily based on its position in the very competitive quick-service restaurant industry, modest track record of improved results and the historical volatility of profits, S&P said.

The ratings also consider its highly leveraged financial risk profile, which is based on forecasted credit ratios and the company's very aggressive financial policy as a result of the presence of its private-equity sponsor, the agency said.

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