S&P cuts MediArena, loans

Standard & Poor's Ratings Services today lowered its long-term corporate credit rating on MediArena Acquisition BV, the parent of Netherlands-based Endemol Holdings BV and Shine Group, to B- from B.

The agency also lowered its issue ratings on the group's senior secured first-lien term debt due 2021 to B- from B and revised down the recovery rating to 4 from 3, indicating an expectation for average recovery prospects (30%-50%; upper half of the range) in the event of a payment default.

S&P downgraded its issue rating on MediArena's $457 million second-lien term loan maturing in 2022 to CCC from CCC+. The recovery rating is unchanged at 6, indicating an expectation of negligible (0%-10%) recovery in the event of a payment default.

All ratings were placed on CreditWatch with negative implications.

S&P said the downgrades reflect its view that the group's credit quality has weakened following unexpectedly high cash outflows from operations reported in the year to Dec. 31. Working capital investment of €79 million during the year, on top of €129 million in one-time integration, legal, and restructuring costs, resulted in a free operating cash flow (FOCF) of negative €89 million and total cash outflow for the year of €122 million.

Reported EBITDA of €116 million was lower than the agency expected because a number of shows were delivered late and others were cancelled.

As a result, the agency estimates that Standard & Poor's-adjusted EBITDA totaled about €190 million in 2015, the debt-to-EBITDA ratio was about 9 times, and the EBITDA-to-interest cover ratio was not quite 1.5 times.

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