Research Update: National Amusements Inc. Ratings Placed On Watch Negative On Covenant Violation And Weak Expected Theater Attendance

National Amusements Inc. (NAI) is in violation of the minimum collateral covenant on its debt at both the holding company NAI and at the operating entity NAI Entertainment Holdings Inc. (NAIEH) due to the significant declines in ViacomCBS Inc.'s share price over the past three weeks. NAI has acquired a waiver that requires it to cure the covenant violation by March 28. Additionally, we expect the spread of the new coronavirus to negatively affect theater attendance in 2020 as movie releases are delayed and consumers increasingly avoid public areas. This could further pressure NAIEH's EBITDA and reduce the headroom under its minimum EBITDA covenant (currently in compliance). We are placing all of our ratings on NAI, including our 'B+' issuer

...- National Amusements Inc. (NAI) is in violation of the minimum collateral covenant on its debt at both the holding company NAI and at the operating entity NAI Entertainment Holdings Inc. (NAIEH) due to the significant declines in ViacomCBS Inc.'s share price over the past three weeks. NAI has acquired a waiver that requires it to cure the covenant violation by March 28. - Additionally, we expect the spread of the new coronavirus to negatively affect theater attendance in 2020 as movie releases are delayed and consumers increasingly avoid public areas. This could further pressure NAIEH's EBITDA and reduce the headroom under its minimum EBITDA covenant (currently in compliance). - We are placing all of our ratings on NAI, including our 'B+' issuer credit rating, on CreditWatch with negative implications. - In resolving the CreditWatch listing, we will evaluate NAI's capital structure and our projections for its operating performance in 2020 after it reaches an agreement with its lenders...

Research Update