Moody's cuts Cooper's Hawk's

Moody's Investors Service said it downgraded Cooper's Hawk Intermediate Holding LLC's corporate family rating to Caa1 from B3, its probability of default rating to Caa2-PD from Caa1-PD and its first-lien senior secured bank facilities rating to Caa1 from B3. The outlook was changed to negative from stable.

The downgrade considers the closure of in-store dining units across the restaurant industry due to community efforts to contain the spread of the coronavirus. While Cooper's will benefit from its active wine club sales that will help offset a portion of fixed costs, leverage before this event was high as a result of the 2019 recapitalization.

Due to the anticipated decline in EBITDA, debt/EBITDA is expected to increase above 8x and EBIT/interest will deteriorate to around 1x. Cooper's cash balances plus the revolver draw are about $50 million which will enable the company to meet its obligations even if the closures last for several months. The negative outlook reflects uncertainty around the duration of unit closures and the pace of rebound once the pandemic begins to subside.

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