Moody's ups, rates Flynn facilities B2

Moody's Investors Service said it upgraded Flynn Restaurant Group LP's corporate family rating to B2 from B3 and its probability of default rating to B2-PD from B3-PD. The agency also assigned B2 ratings to Flynn's proposed credit facilities, consisting of a $1.06 billion first-lien senior secured term loan due 2028 and a $80 million first-lien senior secured revolving credit facility due 2026.

"The CFR upgrade reflects the steady improvement in operating performance that has resulted in earnings and cash flow growth despite continued challenges in the restaurant industry including ongoing pandemic-related government restrictions in certain jurisdictions and work from home arrangements," stated Mike Zuccaro, a Moody's vice president, in a press release.

The term loan proceeds and balance sheet cash will be used to refinance Flynn's credit facilities, repay outstanding debt at the Apple American Group LLC (AAG, an Applebee's franchisor) subsidiary, redeem preferred equity, pay a small dividend and related fees and expenses. As part of the transaction, Flynn will add AAG to the borrowing group, which currently includes Bell American Group LLC (Taco Bell franchisor), Pan American Group LLC (Panera franchisor) and RB American Group LLC (Arby's franchisor).

There are no changes to the B2 ratings on Flynn's $591 million first-lien senior secured term loan due 2025 and $60 million first-lien senior secured revolving credit facility due 2023, and the Caa2 rating on its second-lien secured term loan due 2026, all of which will be withdrawn upon completion of the refinancing transaction.

The outlook is stable.

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