National Amusements Inc.

The stable outlook reflects our expectation that, despite its exposure to volatile box office performance, NAI will be able to maintain compliance with its covenants and strong liquidity because of its equity holdings in Viacom and CBS. We could lower the rating if the combined amount of its cash on the balance sheet and revolver availability falls below $150 million. This could occur if dividend cuts at CBS and Viacom, combined with continued deterioration in theater operations, leads to negative free operating cash flow and the company's inability to access its revolvers due to lack of compliance with financial maintenance covenants. An upgrade would likely require significant improvements in NAI's theater-level operations and EBITDA margin and the company relying less

...Ownership of CBS and Viacom provides significant asset protection and high levels of liquidity. As of Oct 16, 2019, National Amusement Inc.'s (NAI, the holding company) total investment in CBS Corp. and Viacom Inc. (including shares held at its subsidiary) was valued at more than $2.6 billion. While the value of CBS and Viacom shares has declined significantly since the proposed merger of the two companies was announced in Aug. 2019, S&P Global Ratings expects the shares to continue providing substantial dividend income to NAI. While NAI could sell shares to maintain its high levels of liquidity, we believe this would be a last resort in a stress scenario. . The announced merger between CBS and Viacom could have a material impact on cash flow. NAI's ability to service its debt is dependent on dividends from CBS and Viacom. These dividends contributed more than 35% of NAI Entertainment Holdings LLC's (NAIEH, the operating company) last-12-month (LTM) EBITDA as of July 4, 2019. While our...

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