Moody’s lifts Ruby Tuesday liquidity

Moody's Investors Service said it upgraded Ruby Tuesday Inc.'s speculative grade liquidity rating to SGL-3 from SGL-4.

The company's other ratings are unaffected, including its B3 corporate family rating, B3-PD probability of default rating and Caa1 senior unsecured notes rating.

The outlook remains negative.

Moody’s said the upgrade to Ruby Tuesday's liquidity rating reflects the amendment and permanent waiver the company entered into with lenders on Jan. 31.

"The amendment provides Ruby Tuesday with additional covenant headroom under its senior secured revolver and certain mortgage loans, without this amendment, Ruby Tuesday would likely have violated its fixed charge covenant in the near future," Moody’s assistant vice president, analyst Peter Trombetta said in a news release.

In addition to amended covenant levels under its fixed-charge coverage and leverage covenants, the amendment decreased the revolver commitment to $30 million from its original $50 million commitment, the agency added. The revolver maturity was also pulled forward to June 2017 from December 2017. The company stated that it was looking to refinance the revolver with collateralized debt.

However, all else being equal, Moody's said it does not expect Ruby Tuesday's liquidity rating would change if the revolver were to mature and not be replaced.

The revolver has not been used outside of letters of credit.

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