S&P rates Hollywood Theaters

Standard & Poor's said it assigned its B corporate credit rating to Hollywood Theaters Inc., which is analyzed on a consolidated basis with its parent company, Hollywood Theaters Holdings Inc.

S&P also assigned a single B rating and a recovery rating of 4 to the company's proposed five-year $125 million first-lien credit facility and a CCC+ rating and a recovery rating of 5 to Hollywood's proposed $35 million 51/2-year second-lien term loan.

The outlook is negative.

S&P said the ratings reflect Hollywood's high financial risk, the need for additional theater investment to improve its competitive position, cash flow concentration risks and the mature and highly competitive nature of the industry.

Pro forma lease-adjusted debt to EBITDA was high at 6x at March 31 and leverage including the sponsor preferred pay-in-kind stock is 7.1x. Lease-adjusted coverage of interest was 2.2x for the 12 months ended March 31.

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