Research Update: Bowlero Corp. Downgraded To 'B-' On Center Closures, Consumer-Driven Recession; Outlook Negative

As a result of the COVID-19 pandemic, Bowlero Corp. has temporarily closed all of its centers across the U.S., and will likely face a low to zero revenue scenario for as long as they are closed. In addition, our economists forecast a recession in the U.S. in 2020 and we believe consumer discretionary spending will slow as a result. Consequently, even in a containment and recovery scenario and centers reopen, same-center revenue and EBITDA will likely be well below our prior forecast and cause leverage to remain elevated above our 7.5x downgrade threshold at the previous 'B' rating. On March 20, 2020, we lowered our issuer credit rating on Bowlero to 'B-' from 'B', with a negative outlook. We have

...- As a result of the COVID-19 pandemic, Bowlero Corp. has temporarily closed all of its centers across the U.S., and will likely face a low to zero revenue scenario for as long as they are closed. - In addition, our economists forecast a recession in the U.S. in 2020 and we believe consumer discretionary spending will slow as a result. Consequently, even in a containment and recovery scenario and centers reopen, same-center revenue and EBITDA will likely be well below our prior forecast and cause leverage to remain elevated above our 7.5x downgrade threshold at the previous 'B' rating. - On March 20, 2020, we lowered our issuer credit rating on Bowlero to 'B-' from 'B', with a negative outlook. We have also lowered our issue-level ratings on Kingpin Intermediate Holdings LLC's first-lien facility from 'B' to 'B-', in line with our issuer ratings. The recovery rating on the first-lien facility remains '3'. - The negative outlook reflects significant anticipated stress on revenue and liquidity...

Research Update