Moody's affirms HIT Entertainment

Moody's Investors Service said it affirmed all of HIT Entertainment Inc.'s ratings and stable outlook following the company's request for credit agreement amendments, which adjust for HIT's lower EBITDA growth compared to original projections and higher investments going forward as the company takes a greater share of toy manufacturing in house.

The ratings affirmed include the company's B1 corporate family and probability-of-default ratings, Ba3 senior-secured first-lien bank credit facility (LGD3, 34%) and B3 senior secured second-lien loan (LGD5, 87%).

HIT's corporate family rating reflects its high debt-to-EBITDA ratio of 5.7x, sizable annual programming expenses and competitive operating environment, the agency said, which are offset by the company's attractive assets, strong brand value and good growth opportunities.

While HIT's increased capital investment in the new ToyCo should enhance the company's value over the long term, it increases risk to HIT's lender in the short to medium, according to Moody's.

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