Moody’s moves Merlin view to positive

Moody’s Investors Service said it revised its outlook for Motion Midco Ltd. (Merlin) to positive from stable and affirmed its B3 ratings and the B2 instrument rating on the backed senior secured notes issued by Merlin Entertainment Ltd. and the guaranteed senior secured notes, senior secured terms loans (tranche B) and the senior secured revolving credit facility issued by Motion Finco Sarl. The agency also affirmed the Caa2 instrument rating on the backed senior unsecured notes issued by Motion Bondco DAC.

“The change in outlook to positive from stable reflects the strong recovery in operating performance that was well ahead of the rating agency's expectation. For the year ended Dec. 31, 2022, the company attracted 55 million visitors, a significant improvement on the 35 million visitors in 2021, supported by strong demand and higher revenue per visitor in North America, U.K. and parts of Continental Europe. As a result, revenue was up nearly 60% on the previous year at £2.006 billion and EBITDA increased by around 77% to £673 million,” the agency said in a press release.

Moody's said it forecasts Merlin will sustain its robust operating performance attracting just over 60 million visitors in 2023 and maintain a Moody's-adjusted EBITA margin of around 20% despite some inflationary pressure.

Consequently, the agency sees Merlin’s leverage declining over the next 18 months with Moody's-adjusted debt / EBITDA which stood at 8.1x as of Dec. 31 to improve. Moody's-adjusted EBITA / interest expense which stood at 1.51x in 2022 is expected to be maintained around that level.

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