The rating on Luxembourg-based Merlin Entertainments S.a.r.l. (Merlin) reflects Standard&Poor's Ratings Services' view of the group's highly leveraged financial position, relatively high capital expenditure (capex), and significant operating lease liabilities. These factors underpin our view of Merlin's financial profile as highly leveraged. Mitigating Merlin's highly leveraged capital structure is our assessment of the group's liquidity profile as adequate, which gets support from our view of the group's fairly flexible capex. We understand that maintenance capex is about £25 million to £30 million per year, and that expansionary and development capex can be cut quite quickly in the event of adverse market developments. Moreover, reported EBITDA cash interest coverage projected at about 2.0x to 2.5x is a further support.
