S&P gives Rare Restaurant B-, notes CCC+

Standard & Poor's said it assigned its B- corporate credit rating to Rare Restaurant Group LLC.

The outlook is stable.

At the same time, the agency said it assigned a CCC+ rating to the company's proposed $100 million senior secured notes due 2014, with a recovery rating of 3.

The notes have a second-lien behind the $10 million revolver, the agency said, adding that proceeds from the senior secured notes, combined with a $10 million revolving facility (unrated), $20 million seller subordinated notes (unrated) and $70 million common equity units contribution, will be used to fund the purchase of Rare Restaurant Group by Kinderhook Capital Fund II LLC and Soros Strategic Partners L.P. for $180 million.

The ratings on Rare Restaurant Group reflect the risks associated with its participation in the highly competitive restaurant industry, small revenue and EBITDA base, lack of geographic diversity, narrow food focus, as well as highly leveraged capital structure and weak cash flow protection measures after the transaction, S&P noted.

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