Moody’s puts Speedway on review

Moody's Investors Service said it placed Speedway Motorsports Inc.’s ratings on review for downgrade after the disclosure of financing plans for the company’s merger with Sonic Financial Inc.

The merger is expected to be funded with $250 million of new term loans and a “modest” draw on a new $100 million revolver. Speedway’s $200 million of senior notes are expected to remain outstanding for the time being, Moody’s said.

“The proposed financing would more than double the amount of outstanding debt and increase SMI's leverage to approximately 3.9x from 1.8x as of Q2 2019 (as calculated by Moody's). Interest coverage and free cash flow would also deteriorate due to higher interest expense,” said Moody’s in a press release.

The review will look at leverage levels, interest coverage and the financial policy of the company going forward, Moody’s said.

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