S&P lowers HIT Entertainment to CCC+

Standard & Poor's said it lowered HIT Entertainment Ltd.'s long-term corporate credit rating to CCC+ from B.

The outlook remains negative.

The agency said the downgrade reflects its concerns about the impact of the economic downturn on HIT's liquidity profile and, particularly, on the financial covenant headroom under its senior secured credit facilities. S&P is also concerned about its expectations that the company's free cash flow generation will be negative after interest and that HIT's adjusted debt-to-EBITDA ratio will rise above 10 times over the next few quarters.

The company's ratings continue to reflect HIT's very high leverage of 9.6 times, tightening liquidity, significant reliance on its broadcast partners for continuing distribution of its programs, risks associated with audience acceptance of content, a narrow base of operation and participation in a mature and competitive industry with limited prospects for internal growth, S&P said.

The company's strong content franchises only partially offset these factors, the agency added.

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