S&P Assigns B+ Corp Credit Rtg to Romacorp Inc.NEW YORK--(BUSINESS WIRE)--June 12, 1998--Standard & Poor's CreditWire 6/12/98--Standard & Poor's today assigned its single-'B'-plus corporate credit and senior note ratings to Romacorp Inc. At the same time, Standard & Poor's assigned its double-'B'-minus rating on the company's revolving credit agreement Revolving credit agreement A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period. revolving credit agreement See line of credit. . In addition, Standard & Poor's assigned its single-'B'-plus corporate rating to Roma Restaurant Holdings Inc. Additionally, Standard & Poor's assigned its single-'B'-minus rating to the holding company's senior discount notes. Romacorp Inc. is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of the holding company Roma Restaurant Holdings Inc. The corporate credit rating reflects the company's relatively small size in the highly competitive restaurant industry, the challenges associated with future company-owned and franchise restaurant expansion and a highly leveraged capital structure. These factors are partly offset by the company's strong brand recognition in its primary markets and its good operatingmargins. Romacorp Inc., based in Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , operates 47 full service restaurants in 11 states and franchises another 147 in 19 states and over 15 foreign countries. The company's restaurant chain, Tony Roma's Tony Roma's is a casual dining chain restaurant specializing in baby back ribs. The first location was established in 1972 in North Miami, Florida, by the eponymous founder, and today there are roughly 260 locations in 27 countries comprising 32 territories. , offers a full and varied menu, but is most commonly known for its baby-back ribs. Systemwide revenues for the Tony Roma's chain was approximately $350 million during the year ended March 31, 1998. In April 1998, the company entered into a recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. agreement with its parent, NPC 1. (complexity) NPC - NP-complete. 2. (architecture) NPC - Next Program Counter. International, Inc., and with Sentinel Capital Partners, L.P. The recapitalization was structured so that the sources of cash include a $75 million senior note issued by Romacorp, a $25 million senior discount note issued by Roma Restaurant Holdings Inc. and an equity contribution of $23 million in cash from Sentinel. The funds will be used to complete the recapitalization, including the repayment of existing debt and the payment of transaction fees. Upon completion of the recapitalization, Sentinel, and NPC will own securities representing 90% and 10% of the voting capital stock, respectively. The company has good brand recognition associated with its ribs, which are an important part of its merchandising strategy. The growth strategy encompasses continued expansion of the number of company-owned and franchised units, updating and modernizing its restaurants, and increasing its customer base beyond the rib business by leveraging off its well recognized brand. However, success in these efforts may prove difficult given the highly competitive nature of the restaurant industry and growing competition within the casual dining sector. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis after the recapitalization, the company will be highly leveraged with lease-adjusted total debt to earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
bone remodeling effort will require high, but discretionary, levels of capital expenditures in the near term. As a result, Standard & Poor's expects free cash flow to be minimal. The $10 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility is rated one notch higher than the corporate credit rating and is secured by all the assets of Romacorp. Considering the earnings stability of the business, it is anticipated that the company would retain value as a business enterprise in the event of a bankrupcy. Standard & Poor's analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. the company's value under a distressed scenario in which its cash flows were severely discounted. Under this simulated default scenario, collateral value is expected to be more than sufficient to fully cover the credit facility. OUTLOOK: NEGATIVE The outlook recognizes that, after the recapitalization, the company will be highly leveraged and the relatively new management team will experience greater financial and competitive pressures as it expands the business into new territories. If the company is not able to at least attain certain levels of profitability and cash flow protection projected to Standard & Poor's, the rating could be lowered.---CreditWire
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