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DUFF & PHEL:? AMERICAN RESTAURANT GROUP, INC. DOWNGRADED TO 'B+' FROM 'BB'; $120 MILLION OF DEBT AFFECTED

 NEW YORK, Sept. 27 /PRNewswire/ -- Duff & Phelps Credit Rating Co. announced that it has downgraded American Restaurant Group, Inc.'s (ARG) $120 million 12 percent senior secured notes due 1998 to `B+' (Single-B- Plus) from `BB' (Double-B). As a result of this action, the company has been removed from D&P's Rating Watch -- Down where it was placed on Jan. 7, 1993.
 The rating action reflects continued weakness in ARG's cash flow generation relative to the company's high debt service requirements. Through the first six months of 1993, EBITDA of $22.3 million was barely sufficient to cover interest expense, capital expenditures and required bank term loan payments. Cash interest coverage for the six months ended June 28, 1993, was modest at 1.96 times, and reflects approximately $215 million of remaining debt from the company's management buyout in 1987.
 Duff & Phelps expects that the gradual addition of new Black Angus restaurants and the conversion of other units to more productive formats will have a positive, though gradual, effect on ARG's performance, leverage and liquidity measures. However, to a large extent, meaningful improvement will also be contingent upon a stronger economy, particularly in California where approximately 40 percent of the company's units are located.
 American Restaurant Group operates nearly 250 mid-scale restaurants in the western U.S. The company's divisions include Black Angus western style steak houses, Grandy's family restaurants, Spoons casual restaurants, and Spectrum units which feature upscale Northern Italian and American cuisine.
 -0- 9/27/93
 /CONTACT: Scott J. O'Shea of Duff & Phelps Credit Rating Co., 212-908-0200/


CO: American Restaurant Group, Inc. ST: California IN: LEI SU: RTG

MP -- NY086 -- 6069 09/27/93 16:28 EDT
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Publication:PR Newswire
Date:Sep 27, 1993
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