Moody’s downgrades Screenvision

Moody’s Investors Service said it downgraded Screenvision, LLC’s ratings, including its corporate family rating to Caa1 from B2, and changed the outlook to stable from negative.

“The two-notch downgrade reflects Moody’s expectation for weak operating performance over the next year as a result of prolonged theater closures in certain markets triggered by the coronavirus pandemic and uncertainty as to the timing and extent of a recovery in attendance levels,” Moody’s said in a press release.

Without a sharp rebound in attendance levels, Moody’s said it forecasts the company will burn cash over at least the next two quarters, which will reduce the company’s cash position.

“Assuming that by the end of 2021 movie attendance will gradually recover to roughly 70%-80% of the 2019 level, Moody’s projects that Screenvision’s FY2021 leverage will be high, at around 5-8x range, up from 2.5x at the end of 2019 (all ratios are Moody’s adjusted),” the agency said.

The outlook reflects the expectation for a gradual recovery of operations in 2021, with revenue in the $170 million-$200 million range (or 70%-80% of 2019 level) and adequate liquidity, Moody’s said.

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