Fitch: No Rating Action on Brinker Int'l Divestiture Announcement; Outlook Negative

Mon. August 18, 2008; Posted: 03:40 PM

CHICAGO, Aug 18, 2008 (BUSINESS WIRE) -- EAT | Quote | Chart | News | PowerRating -- Brinker International, Inc. (NYSE:EAT) announced today it has entered into a purchase agreement to sell a majority interest in Romano's Macaroni Grill to Mac Acquisition LLC, an affiliate of Golden Gate Capital. Per the agreement, Brinker will receive $131.5 million in cash, of which $6.0 million will be contributed to Mac Acquisition LLC. Brinker will retain a 19.9% interest in Romano's Macaroni Grill. The transaction is expected to close by the end of 2008. The proceeds from the sale are significantly lower than the approximately $300 million Fitch anticipated when Brinker first sought to divest 100% of the Romano's Macaroni Grill concept.

Brinker's credit metrics remain weak for the rating category, as a result of a generally weak operating environment. However, the company's free cash flow in the near term will be augmented by a meaningful reduction in capital expenditures, divestiture proceeds, and to a lesser extent continued franchising activity. Fitch expects the company to use a significant portion of its free cash flow for debt reduction to improve its credit profile. If the company chooses to return a large amount of cash to shareholders and its credit metrics remain weak, a downgrade is likely.

Fitch rates Brinker as follows:

-- Issuer Default Rating (IDR) 'BBB-';

-- Senior unsecured notes 'BBB-';

-- Bank credit facilities 'BBB-'.

The Ratings Outlook is Negative.

For further information, see Fitch's press release, 'Fitch Affirms Brinker's IDR at 'BBB-'; Outlook Revised to Negative,' dated March 27, 2008, and available on the Fitch web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

Fitch Ratings Wesley E. Moultrie II, CPA, +1-312-368-3186 (Chicago) Carla Norfleet Taylor, CFA, +1-312-368-3195 (Chicago) Christopher M. Collins, +1-312-368-3196 (Chicago) Cindy Stoller, +1-212-908-0526 (Media Relations, New York)

For full details on Brinker International (EAT) click here. Brinker International (EAT) has Short Term PowerRatings of 5. Details on Brinker International (EAT) Short Term PowerRatings is available at This Link.

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