S&P rates Restaurant Technologies loans B-, CCC

S&P said it assigned its B- issuer credit rating to Restaurant Technologies Inc. The outlook is stable.

At the same time, the agency assigned B- issue-level and 3 recovery ratings to the company's senior secured credit facilities, which consist of a $60 million revolving credit facility expiring in 2023 and a $375 million first-lien term loan maturing in 2025. The 3 recovery rating indicates an expectation for meaningful recovery of principal (50%-70%; rounded estimate: 65%) in the event of default.

In addition, S&P assigned CCC issue-level and 6 recovery ratings to the company's $125 million second-lien term loan expiring in 2026. The 6 recovery rating indicates an expectation for negligible recovery of principal (0%-10%; rounded estimate: 0%) in the event of default.

“Our B- issuer credit rating on RT reflects our expectation for high leverage in the mid-6x area for year-end 2019 and modest free operating cash flow (FOCF) generation over the next two years as RT invests in new customer acquisitions; the company's small scale and niche focus in the cooking oil solutions market; and its significant customer concentration with McDonald's,” S&P said in a news release.

“Partially offsetting these negative factors are the company's good growth prospects and its broad network of depots which provides modest barriers to entry and the ability to serve national clients, and its high 98% customer retention rates and longer term contract structure which provides good revenue visibility.”

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