S&P cuts Hasbro

S&P said it downgraded the ratings on Hasbro Inc. and its senior unsecured notes to BBB- from BBB. The agency also assigned BBB- ratings to Hasbro’s new senior unsecured notes that it will use to help in acquiring Entertainment One Ltd.

The downgrade to BBB- reflects Hasbro’s plan to increase lease-adjusted debt to EBITDA above 3x through 2020, which is our threshold for the previous one notch higher rating. To finance the acquisition of eOne, Hasbro will use the proceeds from about $1 billion of equity, a $1 billion term loan facility, and about $2.375 million of new debt. We expect the company will reduce leverage through debt repayment and modest EBITDA growth through 2020, but leverage will also remain above the 3x threshold for the previous BBB rating,” said S&P in a press release.

The outlook is stable.

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