S&P may cut Real Mex

Standard & Poor's said it placed its ratings for Real Mex Restaurant Inc. on CreditWatch with negative implications, including the B corporate credit rating and B- second-lien notes rating.

S&P said the CreditWatch placement follows the company's agreement to purchase Chevys Inc., which operates 74 restaurants, the majority of which are located in California, for $77.9 million. Real Mex plans to fund the acquisition through one or a combination of debt, equity, cash on hand, or asset sales.

The CreditWatch listing reflects the possibility that ratings could be lowered based on a potential deterioration of the company's financial profile, the agency said. Upon completion of the transaction, S&P will evaluate the merits of the acquisition and the impact on Real Mex's credit profile.

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