Standard & Poor’s has assigned a single...
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Standard & Poor’s has assigned a single B rating to Foodmaker’s proposed issue of $200 million in senior subordinated notes due 1998, bonds that would help finance a recent Foodmaker acquisition.
In announcing the less-than-optimal debt rating, S&P; noted that “there is concern” over Foodmaker’s recently completed $235-million acquisition of Chi Chi’s, a chain of Mexican restaurants.
“Chi Chi’s is only now showing signs of recovering from past problems of overexpansion in the Mexican food restaurant business and its future direction isn’t certain,” S&P; said in a statement.
“The debt service burden on Foodmaker’s cash flow from a highly leveraged balance sheet isn’t overly severe, but it still represents a significant call on funds,” the debt rating company said.
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