Rating Action: Moody's affirms Bloomin' Brands B1 CFR; outlook negativeGlobal Credit Research - 06 Apr 2021New York, April 06, 2021 -- Moody's Investors Service, ("Moody's") today affirmed Bloomin' Brands, Inc.'s ("Bloomin' Brands") B1 corporate family rating (CFR) and B1-PD probability of default rating (PDR). In addition, Moody's upgraded Bloomin' Brands senior secured revolving credit facility rating and senior secured term loan A rating to Ba2 from Ba3. Moody's also assigned a Ba2 rating to Bloomin' Brands proposed $800 million senior secured revolving credit facility and $200 million term loan A. Moody's also assigned a B2 rating to the company's proposed $300 million senior unsecured note offering and upgraded the Speculative Grade Liquidity Rating to SGL-2 from SGL-3. The company's outlook is negative.The proposed financing will extend the maturities of the $800 billion revolver and $200 million term loan A to 2026. Proceeds from the $300 million of unsecured notes will be used to repay $225 million of term loan A debt and $75 million of outstanding revolver borrowings."The affirmation reflects our expectation that Bloomin' Brands operating performance will gradually improve in 2021 and result in stronger credit metrics and improved liquidity." stated Bill Fahy, Moody's Senior Credit Officer. Moody's expects the trends in same store sales to improve in 2021 due to easier comparisons to prior year and as restrictions begin to lessen on a sustained basis over time. "Bloomin' Brands good liquidity is expected to provide it with the ability to manage the uncertainties that still exist due to continued government restrictions as it reduces leverage to be in line with its net lease adjusted leverage (as calculated by Bloomin' Brands) target of 3.0x," Fahy added. The upgrade of the speculative grade liquidity rating to SGL-2 reflects Bloomin' Brands $800 million revolver that is expected to be largely undrawn, reasonable cash balances and positive free cash flow.The upgrade of the Term Loan A and revolving credit facility reflect the reduction in total secured debt in the pro forma capital structure as well as the issuance of the unsecured notes that increase the amount of liabilities that are junior too and provides additional support for the higher bank facility ratings. However, in the event the amount of secured debt increased materially from currently proposed levels ($800 million revolver and $200 term loan A) the B2 rating on the $300 million senior unsecured notes could be negatively impacted.The negative outlook reflects the uncertainty with regards to the potential length and severity of restrictions which could delay Bloomin' Brands ability to reduce leverage to under 5.5 times and strengthen coverage to above 1.5 times (as calculated by Moody's) on a sustained basis by the end of 2021. The outlook also takes into account the negative impact on consumers ability and willingness to spend on eating out until the crisis materially subsides.Upgrades:..Issuer: Bloomin' Brands, Inc..... Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3....Senior Secured Bank Credit Facility, Upgraded to Ba2 (LGD2) from Ba3 (LGD3)Affirmations:..Issuer: Bloomin' Brands, Inc..... Probability of Default Rating, Affirmed B1-PD.... Corporate Family Rating, Affirmed B1Assignments:..Issuer: Bloomin' Brands, Inc.....GTD Senior Secured Revolving Credit Facility, Assigned Ba2 (LGD2)....GTD Senior Secured Term Loan, Assigned Ba2 (LGD2)....Senior Unsecured Regular Bond/Debenture, Assigned B2 (LGD5)Outlook Actions:..Issuer: Bloomin' Brands, Inc.....Outlook, Remains NegativeRATINGS RATIONALEBloomin' Brands B1 CFR is supported by its high level of brand awareness of its four brands (Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar) and its focus on off-premise, To-Go, and third party delivery services. Bloomin' Brands also benefits from its large and diversified asset base with 1,474 spread across the US and with about 20% located internationally and its good liquidity. The B1 is constrained by the impact of the coronavirus pandemic on Bloomin Brands' operating results which has resulted in very high leverage and weak coverage as of the end of 2020.The restaurant sector has been one of the sectors most significantly affected by the coronavirus outbreak given its exposure to widespread location restrictions and closures as well as its sensitivity to consumer demand and sentiment. We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.Bloomin' Brands board of directors is a good mix of industry and industry related experience, as well as directors with large company experience and varied periods of board tenure. Bloomin' Brands board has 10 members, 8 of which are independent. Restaurants by their nature and relationship with sourcing food and packaging, as well as an extensive labor force and constant consumer interaction are deeply entwined with sustainability, social and environmental concerns. As part of that commitment, Bloomin' Brands has an Advisory Council, comprised of independent scientists and leading authorities who advise it on animal welfare and sustainability practices. While this may not directly impact the credit, they impact brand image and result in a more positive view of the brand overall.Restaurants are deeply entwined with sustainability, social and environmental concerns given their operating model with regards to sourcing food and packaging, as well as having an extensive labor force and constant consumer interaction. While these may not directly impact the credit, these factors could impact brand image and change consumer perception of the brand overall.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSFactors that could result in a stable outlook include a clear plan and time line for the lifting of restrictions on restaurants that result in a sustained improvement in operating performance, liquidity and credit metrics. Whereas an upgrade would require a sustained strengthening of operating performance that resulted in leverage of around 4.5 times, coverage of about 2.5 times and good liquidity.Factors that could result in a downgrade include an inability to reduce leverage or increase coverage despite a lifting of restaurant restrictions and a subsequent recovery in earnings and liquidity. Specifically, ratings could be downgraded in the event debt to EBITDA exceeded 5.5 times or EBIT coverage of interest remained below 1.5 times on a sustained basis.Bloomin' Brands owns and operates a diversified base of casual dining concepts which include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar. Annual revenues were approximately $3.2 billion for the LTM period ending December 2020.The principal methodology used in these ratings was Restaurant Industry published in January 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1108012. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. William V. Fahy VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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