Moody's rates Kerasotes loan B1

Moody's Investors Service said it assigned a B1 rating with a loss-given-default assessment of LGD2 (29%) to Kerasotes Showplace Theatres LLC's amended senior secured bank credit facility and affirmed the corporate family rating at B2 and probability-of-default rating at B3.

The outlook is stable.

The proposed amendment increases the size of the term loan by $75 million, with proceeds expected to fund acquisitions of 13 additional theaters and 153 screens.

The agency said Kerasotes' B2 corporate family rating can absorb the increase in the debt-to-EBITDA ratio to about 6x from 5.5x for the trailing 12 months through Sept. 30. The rating is supported by good liquidity, attractive concession margins, a strong competitive position in the company's targeted smaller markets and an improving asset base.

The ratings for Kerasotes continue to reflect its high financial risk, sensitivity to product from movie studios, lack of scale, a weak industry growth profile and concerns that the company's aggressive expansion will not yield desired returns, Moody's said.

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