Brinker International Inc.'s Proposed $350 Million Senior Unsecured Notes Due 2030 Rated 'BB-' (Recovery Rating: '4')

DALLAS (S&P Global Ratings) June 20, 2023--S&P Global Ratings today assigned its 'BB-' issue-level rating and '4' recovery rating to Brinker International Inc.'s proposed $350 million senior unsecured notes due 2030. The '4' recovery rating indicates our expectation for average recovery (30%-50%; rounded estimate: 30%) in the event of a bankruptcy or payment default. Our 'BB-' issue-level rating on Brinker's $350 million senior unsecured notes due 2024 is unchanged, and we revised our recovery rating to '4' from '3'. The '4' recovery rating indicates our expectation for average recovery (30%-50%; rounded estimate: 30%) in the event of a bankruptcy or payment default. Our issuer credit rating on the company is unchanged. We expect Brinker will use the proceeds from the

...Key analytical factors - Our recovery analysis assumes a simulated default occurring in 2027. We believe a potential default scenario would involve a material deterioration in the company's macroeconomic conditions, weak consumer spending, and evaporating liquidity. - We have valued the company on a going-concern basis based on our belief that it would maximize its value through a reorganization, given its brand recognition and market presence. We apply a 5x multiple, in line with the multiples we use for its peers, to our projected emergence-level EBITDA. - We assume a revolver draw rate of 85% upon default with an increased draw to fund operating losses and general liquidity. Simulated default assumptions - Simulated year of default: 2027 - EBITDA at emergence: $225 million - Implied enterprise value (EV) multiple: 5x - Estimated gross EV at emergence: $1.12 billion Simplified waterfall - Net EV after 5% administrative costs: $1.07 billion - Valuation split (obligors/nonobligors): 100%/0%...

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