S&P: Ruby Tuesday notes B-

Standard & Poor's said it assigned a B corporate credit rating to Ruby Tuesday Inc., along with a B- rating with a 5 recovery rating on its $250 million senior unsecured notes.

The 5 recovery rating indicates 10% to 30% expected recovery in a default.

The outlook is stable.

The proceeds will be used to repay $155 million in existing revolver borrowings, about $45 million in existing senior notes and nearly $20 million in mortgage-related debt.

The company could use the proceeds in the future to fund share repurchases and other acquisitions, S&P said.

The ratings reflect an expectation that credit metrics will continue to weaken in the near term, S&P said.

While the transaction added only modest leverage, the agency said it expects operating performance will decline in the coming year because of continued top-line erosion and increased costs associated with the company adjusting its strategy to reposition itself in the saturated bar-and-grill category within the restaurant industry.

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