S&P affirms Flynn Restaurant

S&P said it affirmed its B issuer credit rating on Flynn Restaurant Group LP.

The outlook is stable.

At the same time, the agency affirmed the B issue-level rating on the company's first-lien debt, consisting of a $60 million cash flow revolver due in 2023 and a $605 million (upsized from $400 million) term loan due in 2025.

The 3 recovery rating is unchanged and indicates an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

Additionally, S&P affirmed the CCC+ issue-level rating on the company's $150 million (upsized from $100 million) second-lien term loan due in 2026. The 6 recovery rating is unchanged and indicates an expectation for negligible (0%-10%; rounded estimate: 0%) recovery.

The upsized debt facilities will be guaranteed by Flynn's Taco Bell, Panera Bread and Arby's operations through a restricted credit group structure.

“The ratings affirmation reflects our expectation for modestly strengthened competitive position, which is offset by some upfront deterioration in credit metrics following the proposed acquisition and debt upsizes, resulting in a net neutral impact on the rating,” S&P said in a news release.

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