Moody's affirms Flynn on upsizing

Moody's Investors Service said it affirmed Flynn Restaurant Group LP's B3 corporate family rating and B3-PD probability of default rating.

Moody's also said it affirmed the B2 ratings on Flynn's $60 million senior secured first-lien revolver and upsized senior secured first-lien term loan, along with the Caa2 rating on its upsized senior secured second-lien term loan.

The outlook is stable.

The proceeds from the proposed $205 million incremental first-lien term loan and $50 million incremental second-lien term loan, along with $246 million of sale leaseback proceeds, $35 million of proceeds from the sale of fee interests of other property and $51 million of cash from the balance sheet, will be used to acquired 368 Arby's restaurants and their related assets from United States Beef Corp. for $559 million, Moody's explained.

The proceeds will also be used to reimburse capital expenditures of $22 million and pay about $6 million in related transaction fees and expenses, the agency said.

The ratings reflect the benefits of size and scale for Flynn following the acquisition, Moody's said.

The ratings also considers the strength and awareness of the Taco Bell and Panera Bread brands, Flynn's adequate liquidity and the expectation that leverage will improve from levels following closing, the agency said.

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