Moody's drops Kerasotes

Moody's Investors Service said it downgraded the corporate family rating of Kerasotes Showplace Theatres LLC to B2 from B1 and affirmed the B1 rating on the company's $300 million of senior secured credit facilities, which will be reduced to $175 million following the company's proposed $200 million sale-leaseback transaction.

The agency said the downgrade of the corporate family rating reflects the higher adjusted leverage, resulting from increased debt to fund a $30 million dividend to certain equity sponsors and $20 million of taxes associated with the sale-leaseback and to pre-fund expansionary capital expenditures, as well as a weaker outlook for the company's operations.

The B2 corporate family rating reflects high financial leverage, over 5 times pro forma for the transaction and after adjusting for off balance sheet leases, lack of consistently compelling films in the marketplace and the company's relatively small scale and concentration of cash flow generating assets, Moody's said.

The rating draws strength, however, from Kerasotes' good liquidity, attractive concession margins, strong competitive position in its targeted smaller markets and relatively modern and improving asset base, the agency added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.