S&P cuts Loews Cineplex view to negative

Standard & Poor's said it revised its outlook on Loews Cineplex Entertainment Corp. to negative from positive.

At the same time, the agency said it affirmed its existing ratings on Loews, including the B corporate credit rating.

S&P said the outlook revision on Loews resulted from the steep drop in U.S. movie attendance in 2005 summer season, which has resulted in sharply lower profitability and cash flow for the company and also reflects the company's increasing lease-adjusted leverage, weak discretionary cash flow and the reduced likelihood that the company will be able to sufficiently reduce its leverage in the near term to warrant an upgrade.

The rating on Loews reflects its high lease-adjusted leverage, significant fixed costs, strong competition from both existing competitors and alternative entertainment sources and the financial strain caused by the currently negative industry operating conditions, S&P said.

These factors are only partially mitigated by the company's position as the third-largest U.S. film exhibitor based on box office revenues, the solid competitive position of most of its U.S. theaters, its strong market position in the high-margin Mexican market and some limited earnings diversity provided by its joint venture film exhibition operations in Spain and South Korea, S&P added.

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