S&P puts National Amusements on watch

S&P said it placed all of its ratings on National Amusements Inc. (NAI), including the B+ issuer credit rating, on CreditWatch with negative implications.

S&P said National Amusements is in violation of the minimum collateral covenant on its debt at both the holding company NAI and at the operating entity NAI Entertainment Holdings Inc. (NAIEH) due to the significant declines in ViacomCBS Inc.'s share price over the past three weeks. NAI has acquired a waiver that requires it to cure the covenant violation by March 28.

Additionally, S&P said it expects the spread of the new coronavirus to negatively affect theater attendance in 2020 as movie releases are delayed and consumers increasingly avoid public areas. This could further pressure NAIEH's EBITDA and reduce the headroom under its minimum EBITDA covenant (currently in compliance), the agency added.

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