TEXT-S&P assigns Landry's notes 'CCC+' rating
Dec 18 - Standard & Poor's Ratings Services today assigned its 'CCC+' issue-level and '6' recovery rating to the proposed $210 million of unsecured notes due 2018 to be issued by Landry's Holdings II Inc. We included this debt under the parent, Houston-based retailer Landry's Inc. The '6' recovery rating indicates our expectation of negligible (0% to 10%) recovery for noteholders in the event of a hypothetical payment default. Proceeds are to be used to fund a distribution to the parent company. All other ratings, including the 'B' corporate credit rating, are unaffected by this transaction. As a result of the transaction, we expect adjusted leverage of nearly 5.9x of interest coverage of about 2x. The corporate credit rating on Landry's is 'B' and the rating outlook is stable. The 'B' rating continues to reflect our view of Landry's financial risk profile as "highly leveraged". In our base-case forecast that incorporates 2% same-store sales and debt reduction with about half of excess cash flows, we see leverage declining to the mid-5x area and funds from operations to debt of 10%, which are in line with levels indicative of the 'B' rating. (For the latest complete corporate credit rating rationale, see the summary analysis on Landry's published on Oct. 25, 2012.) RELATED CRITERIA AND RESEARCH Criteria Guidelines For Recovery Ratings On Global Industrials Issuers' Speculative-Grade Debt, Aug. 10, 2009 RATINGS LIST Landry's Inc. Corporate Credit Rating B/Stable/-- Rating Assigned Landry's Holdings II Inc. $210 Mil. Unsecured Notes Due 2018 CCC+ Recovery Rating 6 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.