S&P downgrades Carmike Cinemas

Standard & Poor's said it lowered Carmike Cinemas Inc.'s corporate credit and senior secured debt ratings to B- from B and subordinated debt rating to CCC from CCC+. The ratings remain on CreditWatch with negative implications pending the completion of 2005 and first-quarter 2006 filings of financial documents with the Securities and Exchange Commission and S&P's review of them.

The downgrade is based of the agency's concerns over the company's liquidity based on the potential for bondholders to accelerate the payment of principal on the notes. It was also motivated by broad uncertainty about U.S. box office performance of feature film releases over the balance of 2006..

The ratings reflect Carmike's high lease-adjusted leverage, weak discretionary cash flow, limited liquidity, less-modern theater circuit compared with key peers and the narrower film preferences in its regions of operation, the agency said. Lease-adjusted debt to EBITDA was 6.4x at Sept. 30.

Moody's said these factors more than outweigh Carmike's decent geographic diversity and competitive positions in many of its smaller markets.

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