S&P drops Perkins

Standard & Poor's said it lowered the corporate credit rating on Perkins & Marie Callender's Inc. to D from CC, along with its $190 million of senior unsecured notes due Oct. 1, 2013 to D from C.

The 6 recovery rating on the notes remains unchanged and indicates 0% to 10% expected recovery in a default.

The agency also said it affirmed the CC rating on Perkins' $132 million of 14% senior secured notes due May 31, 2013. The recovery rating remains at 4, indicating 30% to 50% expected recovery in a default.

The downgrade follows Perkins missing the $9.5 million interest payment due April 1 on $190 million of senior unsecured notes, S&P said.

Although the company has a 30-day grace period to make the payment, the agency said it believes this is highly unlikely given an assessment of its limited liquidity sources.

And the company has another interest payment due on its senior secured notes on May 31, which S&P said it does not foresee it being able to make on a timely basis.

The company is seeking to restructure its balance sheet and could file for protection under Chapter 11, the agency said.

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