Moody's downgrades Cirque du Soleil

Moody's Investors Service said it downgraded CDS U.S. Intermediate Holdings, Inc.'s corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD because of continued challenges in the company's operating performance.

CDS does business as Cirque du Soleil.

Moody's also downgraded the company's first-lien senior secured term loan rating to B2 and the second-lien senior secured term loan rating to Caa2.

The agency also assigned a B2 rating to the senior secured first-lien revolving credit facility due 2022 and withdrew the B1 rating on the senior secured first-lien revolving credit facility due 2020, correcting prior errors.

The outlook also was revised to stable from negative.

The downgrades are due to continued underperformance in several key areas previously targeted for growth, Moody's said, as well as relative stagnation of its existing core performing arts business.

Though Cirque du Soleil continues to expand into new types of shows and experiences and invests for growth both organically and through acquisitions, the agency said it believes the company's largely debt-funded expansion strategy increases the financial strain on core operations and leaves minimal flexibility to address operating weaknesses when they arise.

The company's financial policy that favors shareholders has increased credit risk, which together with the recent deterioration in performance, resulted in a weaker financial profile, Moody's added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.