Research Update: CEC Entertainment LLC Assigned 'CCC' ICR Following Emergence From Bankruptcy, Outlook Negative; Exit Facility Rated

CEC Entertainment LLC has emerged from bankruptcy after facing serious headwinds during the coronavirus pandemic. Through a restructuring, the company has reduced its debt and improved its cash flow prospects. However, due to its position in the out-of-home entertainment industry and the continued effects of the pandemic, we expect CEC to maintain elevated leverage and face difficult operational conditions through 2021. We are assigning our 'CCC' issuer credit rating to CEC and our 'B-' issue-level rating (two notches above our issuer credit rating) and '1' recovery rating to its $200 million first-lien exit facility. The '1' recovery rating indicates our expectation that lenders will receive very high recovery (90%-100%; rounded estimate: 95%) of their principal in the event of a

...- CEC Entertainment LLC has emerged from bankruptcy after facing serious headwinds during the coronavirus pandemic. Through a restructuring, the company has reduced its debt and improved its cash flow prospects. However, due to its position in the out-of-home entertainment industry and the continued effects of the pandemic, we expect CEC to maintain elevated leverage and face difficult operational conditions through 2021. - We are assigning our '###' issuer credit rating to CEC and our 'B-' issue-level rating (two notches above our issuer credit rating) and '1' recovery rating to its $200 million first-lien exit facility. The '1' recovery rating indicates our expectation that lenders will receive very high recovery (90%-100%; rounded estimate: 95%) of their principal in the event of a payment default or bankruptcy. - The negative outlook indicates that we could lower our ratings on the company if unfavorable operating conditions over the next 12 months lead to a deterioration in its cash...

Research Update