NEW YORK (AP) — Fitch lowering its outlook for Darden Restaurants partly because it is using debt to fund its $585 million buyout of Yard House USA Inc.
Darden announced the deal with private equity firm TSG Consumer Partners LLC Thursday.
Fitch said Friday that the acquisition of the casual dining chain is complementary to Darden's other restaurants, like the Olive Garden and Red Lobster, but feels that the debt used to finance the transaction "will initially increase leverage to the high end of the range acceptable for current ratings."
Fitch Ratings cut Darden's outlook to negative from stable.
The ratings agency maintained the Orlando, Fla., company's long-term issuer default rating at "BBB," or investment grade status.
Last month Darden reported that its fourth-quarter net income and revenue climbed, but weak sales at Olive Garden and Red Lobster raised some concerns.
Darden has been reworking the menu and pricing to reverse declining sales at Olive Garden, which is its biggest chain and accounts for almost half its revenue.
Shares of Darden Restaurants Inc. shed 13 cents to $50.07 in midday trading.
