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S&P changes Ruby Tuesday to negative
S&P said it revised its outlook on Ruby Tuesday Inc. to negative from stable and affirmed all ratings, including the B- corporate credit rating.
"The negative outlook revision reflects the company's weakened liquidity and its recent covenant breach, resulting from poor operating performance and negative free operating cash flow. As of the fiscal second-quarter ended November 2016, Ruby Tuesday had breached its fixed-charge financial maintenance covenant test and subsequently received a waiver from its bankers extending a grace period through Jan. 31, 2017, to provide time to negotiate an amendment," S&P credit analyst Mathew Christy said in a news release.
"Although we believe the company will likely receive an amendment to its credit agreement, we also believe the company's operations will remain challenged. In addition, the reset levels to the fixed-charge financial maintenance covenants are uncertain and covenant headroom could remain limited."
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