Research Update: Herschend Entertainment Co. LLC Upgraded To 'B+' On Attendance Recovery; New Term Loan Rated; Outlook Stable

Themed entertainment owner and operator Herschend Entertainment Co. LLC (along with non-rated co-borrowers Herschend Adventure Holdings LLC and Harlem Globetrotters International Inc.) plans to issue a $475 million term loan B due 2028 and use the proceeds and a modest amount of cash to refinance its existing term loan B due 2026. Demand for the company's theme parks is improving. We believe the company's investment and leverage policy and our upwardly revised base case expectation for the company's revenue, EBITDA, and cash flow will likely cause our measure of leverage to improve to around 4x or below through 2022. This is below our upgrade threshold of 5x for the rating. As a result, we raised our issuer credit rating on

...- Themed entertainment owner and operator Herschend Entertainment Co. LLC (along with non-rated co-borrowers Herschend Adventure Holdings LLC and Harlem Globetrotters International Inc.) plans to issue a $475 million term loan B due 2028 and use the proceeds and a modest amount of cash to refinance its existing term loan B due 2026. - Demand for the company's theme parks is improving. We believe the company's investment and leverage policy and our upwardly revised base case expectation for the company's revenue, EBITDA, and cash flow will likely cause our measure of leverage to improve to around 4x or below through 2022. This is below our upgrade threshold of 5x for the rating. - As a result, we raised our issuer credit rating on the company to 'B+' from 'B'. - We also assigned our 'B+' issue-level rating and '3' recovery rating to the proposed senior secured term loan. - The stable outlook reflects our base-case expectation that Herschend's investment plans and leverage policy will enable...

Research Update