S&P cuts O'Charley's credit ratings

Standard & Poor's Ratings Service lowered its ratings on casual dining company O'Charley's Inc. further into junk, citing the likelihood that slow sales and profit will continue into 2009.

S&P on Thursday cut the company's corporate credit rating to "B+" from "BB-" and its senior secured credit facility rating to "BB" from "BB+." The ratings agency also reduced its rating on O'Charley's subordinated notes to "B-" from "B." The outlook is stable. All of the ratings are non-investment grade.

Standard & Poor's credit analyst Charles Pinson-Rose said the rating change "reflects the strong possibility that the sales and profitably declines in the past three quarters, which have weakened the company's credit metrics, will continue through the balance of the year and likely into 2009."

In its second quarter _ the most recent period reported by the company _ O'Charley's posted a wider loss and slashed its 2008 profit guidance. The company's revenue dipped 3 percent and same-store sales, or sales at stores open at least a year, fell 1.4 percent at O'Charley's company-owned restaurants.