Research Update: CEC Entertainment LLC Upgraded To 'B-' From 'CCC' On Improving Operating Conditions And Liquidity, Outlook Stable

Texas-based family entertainment and dining operator CEC Entertainment LLC has experienced a more rapid recovery than we originally anticipated given that its sales were approaching pre-pandemic levels as of July 2021. We believe the company will sustain its positive sales momentum as consumers increase their spending on out-of-home entertainment and services. In addition, we view CEC as having sufficient liquidity to absorb potential volatility in its sales stemming from the spread of the delta coronavirus variant. Therefore, we raised our issuer credit rating on CEC to 'B-' from 'CCC' and our issue-level rating on its first-lien senior secured notes due 2026 to 'B-' from 'CCC'. The stable outlook reflects our expectation for a continued recovery in the company's sales, which

...- Texas-based family entertainment and dining operator CEC Entertainment LLC has experienced a more rapid recovery than we originally anticipated given that its sales were approaching pre-pandemic levels as of July 2021. - We believe the company will sustain its positive sales momentum as consumers increase their spending on out-of-home entertainment and services. In addition, we view CEC as having sufficient liquidity to absorb potential volatility in its sales stemming from the spread of the delta coronavirus variant. - Therefore, we raised our issuer credit rating on CEC to 'B-' from '###' and our issue-level rating on its first-lien senior secured notes due 2026 to 'B-' from '###'. - The stable outlook reflects our expectation for a continued recovery in the company's sales, which will likely support consistent positive free operating cash flow (FOCF) generation and an improvement in its credit metrics....

Research Update