Moody's reviews Dave & Buster's for downgrade

Moody's Investors Service said it placed Dave & Buster's Inc.'s B2 corporate family and probability of default ratings on review for possible downgrade, along with the Ba2 rating on its $50 million senior secured revolving credit facility due 2015, Ba2 rating on its $150 million senior secured term loan due 2016 and the B3 rating on its $200 million senior unsecured notes due 2018.

The review follows news of the company's proposed offering of senior discount notes at Dave & Buster's Parent, Inc., its indirect parent holding company.

The expected proceeds of about $100 million will be used for a return of cash dividend to shareholders or for repurchase a portion of the parent company's common stock, Moody's said.

The new notes will not be rated by Moody's.

The downgrade review reflects the expected material increase in enterprise-wide financial leverage, the agency said.

The review also incorporates the heightened risk profile due to the increased leverage and management's shift to a more aggressive financial strategy at a time when the business recovery has not yet gained full traction and may still be somewhat fragile, Moody's said.

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