Fitch Affirms ARAMARK's IDR at 'B'; Downgrades Sr. Unsecured Notes to 'CCC'; Outlook Stable

Fitch Ratings has affirmed the following ratings for ARAMARK Corporation (ARAMARK):

--Long-term Issuer Default Rating (IDR) 'B';

--Senior secured credit facilities 'BB-/RR2'.

Fitch has simultaneously downgraded the following ratings:

--Senior unsecured notes due 2015 to 'CCC/RR6' from 'B-/RR5';

--Senior unsecured notes due 2012 to 'CCC/RR6' from 'CCC+/RR6'.

The Rating Outlook is Stable.

These rating actions affect approximately $6.0 billion of debt at Jan. 2, 2009.

ARAMARK's ratings reflect its high financial leverage, its strong market share positions and its high client retention rate. Although the company's revenue is being negatively impacted by the economic recession, its diversified customer base and ability to reduce costs should mitigate downside risk on operating earnings and cash flow. A significant portion of ARAMARK's revenue is generated from less economically sensitive sectors; such as Education, Healthcare and Corrections. Furthermore, no single client represented more than 1% of the $13.5 billion of total sales it generated at the fiscal year ended Oct. 3, 2008. Fitch views ARAMARK's operating structure as more recession resistant than others in the foodservice industry given this diversity, the contract nature of its business and its highly variable cost structure.

The downgrade of the company's 2015 and 2012 senior unsecured notes is driven by Fitch's recovery analysis for companies with IDR ratings of 'B+' or below. The recovery ratings for ARAMARK's debt consider bondholder recovery in a distressed situation while incorporating the fact that, in the current environment, recovery rates have declined across most industries. Fitch anticipates 71%-90% or superior recovery for ARAMARK's secured bank debt and negligible recovery for unsecured bondholders.

ARAMARK's credit profile is supported by its lack of near term maturities and its good liquidity. The company's most significant upcoming maturity is $250 million of 5% unsecured notes due June 1, 2012. During the latest 12 month (LTM) period ended Jan. 2, 2009, ARAMARK generated $63 million of free cash flow (cash flow from operations less capital expenditures and dividends) and at Jan. 30, 2009 the company had $520 million available under its $600 million revolver which expires January 2013.

ARAMARK's credit statistics are currently adequate for the rating category. For the LTM period ended Jan. 2, 2009, total debt-to-operating earnings before interest, taxes, depreciation and amortization (EBITDA) was 5.6 times (x), operating EBITDA-to-gross interest expense was 2.1x and funds from operations (FFO) fixed charge coverage was 1.8x. Total adjusted debt-to-operating earnings before interest, taxes, depreciation, amortization and rental expense (EBITDAR), which accounts for operating leases and balances outstanding under ARAMARK's $250 million accounts receivable securitization program, was 6.1x.

ARAMARK is in compliance with all of its debt covenants. ARAMARK's maximum consolidated secured debt ratio of 5.5x steps down by 0.25x increments annually every June 30 until 2013. At Jan. 2, 2009, the ratio (as defined by its credit agreement) was 3.77x, leaving the company significant cushion. ARAMARK's ability to incur additional debt and make restricted payments is limited by a minimum interest coverage ratio of 2.0x. At Jan. 2, 2009, the ratio (as defined by its credit agreement) was 2.2x. Given ARAMARK's current level of liquidity, lack of near-term maturities and its balanced financial strategy, Fitch does not anticipate a need to incur incremental debt.

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.