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Moody's rates SeaWorld loan Ba3
Moody's Investors Service said it assigned a Ba3 (LGD3, 40%) rating to SeaWorld Parks & Entertainment, Inc.'s proposed $192.5 million senior secured five-year revolver. The B1 corporate family rating, the B1-PD probability of default rating, the Ba3 rating on the existing senior secured term loan and the stable outlook are not affected.
The new revolver is part of a credit agreement amendment SeaWorld is proposing that would also loosen the excess cash flow sweep and the restricted payment covenants including increasing the size of permitted dividends. Moody's expects SeaWorld to utilize the additional flexibility to establish a dividend as part of its pending initial public offering.
The agency said the additional restricted payment flexibility is credit negative and the introduction of a dividend will reduce free cash flow. However, the IPO will lead to a favorable reduction of debt and leverage, the agency said.
SeaWorld's B1 corporate family rating reflects the strong brands and consumer appeal of its portfolio of 11 regional and destination amusement parks, tempered by exposure to cyclical discretionary consumer spending, high debt-to-EBITDA leverage (estimated at 4.9 times) and ongoing risks related to cash distributions or leveraging actions by equity sponsor Blackstone, Moody's said.
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