S&P cuts Real Mex

Standard & Poor's said it lowered its corporate credit rating on Real Mex Restaurant Inc. to B- from B.

At the same time, the agency said it affirmed the B- senior secured rating on the company's $105 million second-lien notes due 2010 and assigned a 2 recovery rating to these notes.

The outlook is stable.

All ratings are removed from CreditWatch, where they were placed with developing implications on Jan. 19, 2006, S&P noted, adding that the downgrade reflects an increase in debt leverage following the acquisition of the company by affiliates of Sun Capital Partners for about $359 million.

The agency said that the ratings on Real Mex reflect the company's small size in the highly competitive restaurant industry, regional concentration and a highly leveraged capital structure.

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