S&P lowers Kuehg, rates loan CCC

S&P said it lowered its corporate credit rating on Kuehg Corp. to B- from B and lowered its issue-level rating on the company's $945 million first-lien term loan ($932 million outstanding), which includes the proposed $50 million add-on, to B-from B.

The 3 recovery rating is unchanged, indicating an expectation for meaningful recovery (50%-70%; rounded estimate: 50%) of principal for debtholders in the event of a payment default.

The agency also assigned its CCC issue-level rating and 6 recovery rating to the company's proposed $260 million senior secured second-lien term loan. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) of principal for debtholders in the event of a payment default.

The outlook is stable.

The downgrade reflects the agency’s expectation that the company’s debt-financed dividend will increase the lease-adjusted debt level to 7.2x from 6.3x and its reported free-operating-cash flow will be negligible in 2017. The company has taken positive steps in closing underperforming centers, which will improve profitability and EBITDA margins going forward.

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