Moody's cuts RC/Arby's rating on senior notes

Nation's Restaurant News, Nov 18, 1996

NEW YORK - Moody's Investors Service has lowered its rating on RC/Arby's Corp. senior secured notes following a recent report that Triarc Cos. Inc. will spin off its subsidiary into a new publicly traded company next year.

"While the company's operating performance has improved in the most recent quarters, liquidity and debt-service coverage remain tight, and operating margins at company-owned restaurants remain weak relative to industry norms," Moody's said in downgrading the notes to a B2 rating from a B1.

Moody's, classifying the RC/Arby's debt in a "negative outlook" category, is the second debt-rating agency to urge caution. A week earlier Standard & Poor's placed the debt on "credit watch" and noted that the spin-off "could further strain [RC/Arby's Corp.'s] already weak financial profile."