OREANDA-NEWS. S&P Global Ratings today assigned its 'B' issue-level rating and '3' recovery rating to Atlanta, Ga.-based quick-service restaurant franchisor Focus Brands Inc.'s $625 million first lien secured credit facilities, consisting of a $600 million term loan and $25 million revolving credit facility. The '3' recovery rating indicates our expectation that lenders would receive meaningful recovery (50%-70%, upper half of the range) of their principal in the event of a payment default. This follows a leverage-neutral refinancing to extend the company's maturity schedule, simplify its capital structure, and lower its overall cost of capital. Proceeds from the new facilities will be used to repay all borrowings under the existing first and second lien term loans. All other ratings, including the 'B' corporate credit rating and stable outlook on the company, are unchanged.

As part of our recovery rating analysis, we have valued the company on a going-concern basis using a 6x multiple to our projected emergence-level EBITDA to arrive at a gross enterprise value of $420 million. The valuation multiple used is in line with other rated restaurant franchisors and reflects the relatively stable stream of earnings and cash flow that are generated by franchisors given the recurring nature of franchise fees and royalties.