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Rating Action:

Moody's assigns Ba2 to Wendy's / Arby's Restaurant's proposed bank facility; lowers unsecured notes to B3; outlook stable

10 May 2010

New York, May 10, 2010 -- Moody's Investors Service today assigned a Ba2 rating to Wendy's / Arby's Restaurants, LLC's (WAR) proposed $150 million senior secured revolving credit facility and $500 million senior secured term loan B. In addition, Moody's downgraded the $550 million senior unsecured notes of WAR to B3 from B2. The B2 Corporate Family Rating (CFR) and Probability of Default Rating (PDR) of WAR as well as the Caa1 senior unsecured note ratings of Wendy's International Inc. (Wendy's) were affirmed. The ratings outlook is stable.

"The affirmation of the B2 CFR of WAR reflects the company's high leverage and weak coverage as well as its good liquidity and meaningful scale. The ratings also reflect Wendy's reasonable brand strength versus its peers, but also consider its more modest scale and limited day-part offering than either McDonald's or Burger King" stated Bill Fahy, Moody's Senior Analyst. " The ratings also consider the persistently weak traffic patterns at Arby's and its smaller scale versus Wendy's and other quick service restaurants (QSR). We also believe soft consumer spending and intense competition will continue to pressure the operating margins of both restaurant concepts -- although more so at Arby's" stated Fahy.

The assignment of the Ba2 rating to WAR's senior secured bank credit facility reflects the facilities first priority lien on substantially all assets of Arby's and a more limited but still meaningful secured interest in the assets of Wendy's. The Ba2 rating also considers the structural support received from a significant amount of liabilities that are ranked junior to this facility.

The downgrade of WAR's $550 million senior unsecured notes to B3 reflects the material increase of senior secured debt at WAR that is contractually senior to the notes. The downgrade also reflects the repayment of Wendy's $200 million 6.25% unsecured notes -- which are effectively subordinated to the WAR notes -- which reduces the cushion under WAR's unsecured notes in a distressed situation.

Proceeds from the new proposed term loan B will be used to re-finance the company's existing bank credit facility as well as fund the repayment of Wendy's $200 million 6.25% senior unsecured notes. The ratings on these debt instruments will be withdrawn upon the successful closure of the proposed new credit facility and repayment of the existing credit facility and $200 million 6.25% notes.

Ratings assigned are:

Wendy's / Arby's Restaurants, LLC (WAR)

- Proposed $150 million senior secured revolving credit facility expiring 2015 at Ba2 (LGD 2, 17%)

- Proposed $500 million senior secured term loan B due 2017 at Ba2 (LGD 2, 17%)

Rating downgraded are:

Wendy's / Arby's Restaurants, LLC

- $550 million guaranteed senior unsecured notes due 2016 lowered to B3 (LGD 4, 62%) from B2 (LGD 3, 46%)

Ratings affirmed and LGD point estimates updated are;

Wendy's / Arby's Restaurants, LLC

- Corporate Family Rating at B2

- Probability of Default Rating at B2

Wendy International Inc.

- $100 million 7% senior unsecured notes due 12/15/2025 at Caa1 (LGD 6, 91% from LGD 5, 86%)

- $225 million 6.2% senior unsecured notes due 6/14/2014 at Caa1 (LGD 6, 91% from LGD 5, 86%)

Ratings to be withdrawn are:

Wendy's International, Inc.

- $200 million 6.25% senior unsecured notes due 11/15/2011 at Caa1 (LGD 5, 86%)

Arby's Restaurant Group Inc.

- Senior secured revolving credit facility expiring 2011 at Ba2 (LGD 1, 9%)

- Senior secured term loan B due 2012 at Ba2 (LGD 1, 9%)

The principal methodology used in rating Wendy's / Arby's Restaurants, LLC was Moody's Global Restaurant Industry Methodology, published in June 2008 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

The most recent rating action on WAR and its subsidiaries, Wendy's and Arby's, occurred on June 17, 2009, when the ratings were downgraded -- Corporate Family and Probability of Default ratings to B2 from B1.

Wendy's / Arby's Restaurants, LLC., a wholly owned subsidiary of Wendy's / Arby's Group, is the parent company of Arby's Restaurant Group Inc. and Wendy's International Inc. Annual revenues are approximately $3.6 billion.

New York
William V. Fahy
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Ba2 to Wendy's / Arby's Restaurant's proposed bank facility; lowers unsecured notes to B3; outlook stable
No Related Data.
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