Standard & Poor's Ratings Services said today that it assigned a 'BB' issue rating and '1' recovery rating to Miami-based Burger King Corp.'s $1.875 billion revolving credit facility, consisting of a $150 million revolving credit facility and $1.725 billion term loan that will be allocated among A and B tranches. The '1' recovery rating reflects our expectation of very high (90% to 100%) recovery of principal in the event of a payment default. We expect the company will use the proceeds to refinance its existing term loan.
All of our other existing ratings on Burger King, including the 'B+' corporate credit rating, remain unchanged. The outlook is stable.
Our view of the company's financial risk profile "highly leveraged," based on forecasted credit ratios. As a result of the refinancing, the company's debt amounts do not change materially and interest costs and cash flow metrics improve very modestly. We also assess its business risk as "fair," which incorporates the highly competitive nature of the industry and its susceptibility to economic conditions that somewhat offsets Burger King's global presence, domestic market share, and recent operational improvements.
RELATED CRITERIA AND RESEARCH
-- Issuer Ranking: U.S. Restaurants & Retail, Strongest To Weakest, April
30, 2012
-- Industry Report Card: Our Credit Outlook Remains Slightly Negative For
The U.S. Retail Industry This Year, April 30, 2012
-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
-- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
-- Key Credit Factors: Business And Financial Risks In The Retail
Industry, Sept. 18, 2008
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
RATINGS LIST
Burger King Corp.
Corporate Credit Rating B+/Stable/--
New Ratings
Burger King Corp.
Senior Secured
$150 mil revolver BB
Recovery Rating 1
Term loan A BB
Recovery Rating 1
Term loan B BB
Recovery Rating 1
