Restaurant Technologies term loan bid lower following S&P ratings reduction

By Sara Rosenberg

New York, Nov. 22 – Restaurant Technologies Inc. (Double Eagle Buyer Inc.) saw its term loan slide on the bid side in a relatively quiet, pre-holiday secondary market on Wednesday in reaction to a ratings downgrade by S&P Global Ratings.

The term loan was quoted at 98½ bid, 99½ offered, compared to levels of 99 bid, 99½ offered on Tuesday, a trader remarked.

On Wednesday, S&P cut all ratings on Restaurant Technologies, including its issuer credit rating to B- from B. The outlook is stable.

The downgrade was attributed to high-leverage, volatility in used cooking oil prices, and the expectation of negative cash flow in the next two years from higher interest burden and higher capital investments.

S&P said in the rating release that aggressive financial policy and weaker-than-expected earnings keep leverage elevated at Restaurant Technologies. S&P previously expected improved earnings to lower leverage to the 5x area, but a term loan upsize in 2022 and a substantial softening in used cooking oil prices in the first half of the year contributed to leverage remaining above 7x.

“High capital expenditure (capex) and higher interest expense have depressed cash flow. We expect to see negative free operating cash flow (FOCF) in the next two years as the company spends on installations, equipment, and higher truck maintenance” the S&P rating release added.

Restaurant Technologies is a provider of cooking-oil management and back-of-house hood and exhaust cleaning solutions.

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