Credit Crunch on Main Street

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"There are no credit issues at McDonald's," says Riker. Bank of America spokesman Larry DeRita, meanwhile, disputed the memo, denying any credit freeze. "We are not naive about the current lending environment and realize lending to franchisees will be more difficult," wrote Morgan Stanley (MS) restaurant analyst John Shanley in a note to investors.

Liquidity Challenges

There's no debate that gaming companies are taking it on the chin as consumers cut back on discretionary spending. Mohegan Sun and Boyd Gaming (BYD) have suspended expansion projects, while Pinnacle Entertainment (PNK) abandoned a planned acquisition bid. "Growth is stymied," says Wachovia (WB) analyst Dennis M. Farrell Jr. Trump Entertainment's future, Farrell says, is riding on a planned $316 million sale of Atlantic City's Trump Marina. Coastal Development Chairman Richard Fields says he has secured financing to buy it, but details are still sketchy. Even if the deal closes as planned, Trump's leverage ratio is still much higher than its peers, so all this does is "buy Trump some time," Farrell notes. A Trump spokesperson did not return calls for comment.

Companies are understandably reluctant to talk about cash woes, but their SEC filings speak volumes. "The company is highly leveraged," read the latest quarterly report filed by S&P "weakest link" member Merisant, maker of the artificial sweetener Equal. Debt payments could severely crimp innovation and marketing going forward, the company warned. (A spokeswoman declined to comment.) Even some technology firms, which are generally less leveraged than other sectors, are being swept up into the vortex. Semiconductor-industry supplier MKS Instruments (MKSI), facing a sharp slowdown in demand, took the unusual step of slashing executives' salaries to preserve cash. Merrill Lynch (MER) semiconductor analyst Brett Hodess has chopped his forecast of industry capital expenditure spending from 9% growth to a 6% decline, in part due to growing credit problems for some chipmakers.

Six Flags is another liquidity-challenged player. The theme park operator chose not to pay a dividend for the last two quarters, and its $3.1 billion of debt is rated CCC+, or junk status, by S&P. (The company declined to comment.) Such a rating, according to historical averages, means the odds of a default within one year are 1 in 4. If that happens, Six Flags looks likely to have plenty of company on the ride down.

Boyle is deputy Corporations editor for BusinessWeek.