S&P rates Carmike Cinemas notes

Standard & Poor’s said it affirmed its B+ corporate credit rating on Carmike Cinemas Inc. The outlook remains stable.

At the same time, S&P assigned a BB issue-level rating and 1 recovery rating to the company’s proposed $230 million senior secured second-lien notes due 2023. The 1 recovery rating indicates an expectation for very high recovery (90%-100%) of principal in the event of a payment default.

The BB issue-level and 1 recovery rating on the company’s upsized revolving credit facility (now $50 million) remain unchanged.

“The B+ corporate credit rating on Carmike reflects our view that the company’s leverage will decline to below 5x in 2015 and remain below 5x on a sustained basis,” said S&P credit analyst Jawad Hussain in a news release.

“We also expect that the company will continue to direct free cash flow toward theater expansion and acquisitions, modestly improving its circuit despite industry pressures on attendance.”

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