Moody's boosts Spectacle Gary loans

Moody's Investors Service said it raised Spectacle Gary Holdings, LLC's $345 million term loan due 2025 and $25 million delayed-draw term loan to B3 from Caa1 and $10 million revolver expiring 2024 to B1 from Caa1. The agency affirmed Spectacle's Caa1 corporate family rating, Caa1-PD probability of default rating

The one-notch upgrade of Spectacle's term loan and delayed draw term loan to B3 reflects the increased amount of loss absorption provided to these loans from a $9 million Paycheck Protection Loan that the company received in the quarter ended June 30, 2020, along with an increase in the amount of subordinated PIK notes outstanding.

Spectacle originally sold $35 million in PIK notes but subsequently sold $10 million more. “This $10 million increase along with $6 million of PIK interest added to balance sheet through March 31, 2021, brought the balance to about $51 million. Moody's expects the PIK note balance will continue to grow until it is repaid. The PIK maturity matches the term loan maturity, although it can be repaid in part or in whole at any time,” the agency said in a press release.

The three-notch hike in Spectacle's revolver to B1 from Caa1 reflects the same increased amount of credit support described above “The upgrade of the revolver rating also reflects the correction of an error. Prior rating actions on the revolver mistakenly did not account for its super-priority status. This has been corrected, and today's rating action reflects the revolver's super-priority status,” Moody’s said.

The agency also revised the outlook to positive. The outlook revision considers that besides successfully opening within the budget despite the challenges presented by the pandemic, the easing of social distancing restrictions will lead to increased business, improved EBITDA and lower leverage, Moody’s said.

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