Moody’s ups TGI Fridays CFR, cuts loans

Moody's Investors Service said it upgraded TGI Fridays, Inc.'s corporate family rating to B2 from B3.

In addition, as a result of a refinancing of the company's capital structure wherein the first-lien term facility will be increased by about $207 million and the second-lien debt repaid, the agency downgraded the ratings for TGI Fridays’ amended guaranteed first-lien senior secured revolving credit facility and guaranteed first-lien senior secured term loan to B2 from B1.

Moody's also affirmed the company's probability of default rating at B3-PD.

The ratings for TGI Fridays' $180 million guaranteed second-lien senior secured term loan remains unchanged and will be withdrawn at closing.

The outlook is stable.

Moody’s said the upgrade reflects the sizeable reduction in funded debt levels resulting from the December 2014 sale of the U.K. franchise business and expectation of improved credit metrics despite the loss of earnings from the U.K. operation. The upgrade reflects the agency’s view that earnings, credit metrics and liquidity will benefit from a continued focus on reducing costs, enhancing guest service levels and reimaging restaurants.

The U.K. operations were sold in December to a third party for net proceeds of around $316 million, which were used to partially repay outstanding debt under its $440 million first-lien term loan as per the terms of its credit agreement.

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