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S&P ups Merlin Entertainments
S&P said it raised the issuer rating for Merlin Entertainments plc (Motion Midco Ltd.) to B- from CCC+, the senior secured debt to B from CCC+ and on the senior notes to CCC from CCC-. The agency also revised upward the recovery rating on the senior secured notes to 2 (rounded estimate: 70%) from 3 (rounded estimate: 60%).
“Merlin's credit metrics appear stretched for 2021, but we expect them to improve steadily over the next 12 months. The group's 2021 credit metrics seem stretched, with adjusted leverage of 13.5x (21x including preference shares), but we expect them to steadily improve to 8.5x (13.5x) in 2022 and 7.5x (12x) in 2023. More importantly, as the capital expenditure (capex) for new-build attractions tapers, we forecast that the group's free operating cash flow (FOCF) after lease payments will be about £100 million in 2022 and 2023,” the agency said in a press release.
S&P said it also estimates the trend for staycations continuing and benefiting Merlin's resort theme parks and Legoland parks, but sees its Midway segment of branded indoor attractions needing longer to recover.
The outlook is stable.
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