S&P cuts Kerasotes, rates unit's loan B-

Standard & Poor's said it lowered its corporate credit rating on Kerasotes Showplace Theatres Holdings LLC to B- from B based on the increased credit risk from the proposed sale leaseback of 17 of the company's 77 theaters.

At the same time, S&P assigned its B- rating and a recovery rating of 3 to Kerasotes' operating subsidiary Kerasotes Showplace Theatres LLC's $174 million senior secured amended bank credit facility.

The outlook is negative.

S&P said the rating was lowered because the sale leaseback will decrease the company's EBITDA by 38%, turn EBITDA margins from leading to trailing its rated peers, increase negative discretionary cash flow, and raise lease-adjusted leverage. The transaction also will increase liquidity, reduce balance sheet debt, and improve covenant compliance.

However, the company plans to use the extra cash on its theater expansion plan and will probably draw on its revolving credit for the same purpose.

© 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.