Research Update: Bowlero Corp. Outlook Revised To Stable From Negative On Strong Recovery And Proposed Merger; Ratings Affirmed

We believe Bowlero Corp. is experiencing the beginning of a robust recovery driven by pent-up demand for out-of-home entertainment options. As a result, we have updated our base-case forecast and believe Bowlero will end fiscal 2022 with adjusted leverage in the high-7x area due to stronger revenue and EBITDA assumptions. Bowlero Corp. has also announced plans to merge with special-purpose acquisition company (SPAC) ISOS Acquisition Corp. in a transaction that values the enterprise at $2.616 billion. Transaction proceeds will be used to repurchase equity from existing shareholders, add cash to the balance sheet, and pay down existing preferred equity. If the proposed transaction occurs, the merged entity will become a publicly traded company. Therefore, we revised the outlook to stable

...- We believe Bowlero Corp. is experiencing the beginning of a robust recovery driven by pent-up demand for out-of-home entertainment options. As a result, we have updated our base-case forecast and believe Bowlero will end fiscal 2022 with adjusted leverage in the high-7x area due to stronger revenue and EBITDA assumptions. - Bowlero Corp. has also announced plans to merge with special-purpose acquisition company (SPAC) ISOS Acquisition Corp. in a transaction that values the enterprise at $2.616 billion. Transaction proceeds will be used to repurchase equity from existing shareholders, add cash to the balance sheet, and pay down existing preferred equity. If the proposed transaction occurs, the merged entity will become a publicly traded company. - Therefore, we revised the outlook to stable from negative and affirmed our 'B-' issuer credit rating and 'B-' issue-level ratings on the company's $50 million revolver and $825 million term loan. - Our stable outlook reflects our expectation...

Research Update