Moody's lifts Carmike bonds to B1

Moody's Investors Service said it upgraded the rating on the $210 million second-lien bonds of Carmike Cinemas, Inc. to B1 from B2 and affirmed its B2 corporate family rating and SGL-1 speculative grade liquidity rating.

The stable outlook was maintained.

Since the April 2012 issuance of the second-lien bonds, Carmike expanded its asset base to 2,660 screens from 2,245 screens, and revenue pro forma for a full year of acquisitions grew to about $700 million in 2013 from roughly $540 million in 2012.

Moody's believes that in a distress scenario, bondholders could benefit from the junior capital provided by leases. This lease cushion has risen with the growth of the company, so the agency said it considers the bondholders' position improved and upgraded the second-lien bonds rating to B1 from B2.

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