S&P keeps Wendy's on watch

Standard & Poor's said Wendy's International Inc.'s BB- corporate credit rating would remain on CreditWatch, where it was placed with negative implications on April 26, 2007.

The update follows Wendy's announcement that it signed a definitive merger agreement with Triarc Cos. Inc., in which Wendy's shareholders would receive Triarc class A common stock for each share of Wendy's common stock.

S&P said the merger with Triarc, whose only operating subsidiary is Arby's Restaurant Group Inc. (B+/Watch developing), may result in a one-notch downgrade.

Arby's has a weaker business profile and higher financial risk than Wendy's, and the new entity would be subject to significant integration risk, the agency noted.

Pro forma for the merger, lease-adjusted debt-to-EBITDA ratio at the combined company will be about 3.9 times, the agency said, which does not account for any potential cost savings or operating improvements.

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