S&P Global Ratings reduced National Amusements' credit rating after a debt refinancing and expects the "company's liquidity to remain thin for the rest of 2020" owing to business trends.
A day after the Redstone family's National Amusements and its lenders renegotiated a credit line of a subsidiary after a recent technical violation, S&P Global Ratings downgraded the firm's credit rating.
"We are lowering our issuer credit rating on NAI to 'B-' from 'B+' because we expect the company's liquidity to remain thin for the rest of 2020 due to negative cash flow from extended theater closures and its limited borrowing capacity after the cancelation of the revolver at NAIEH," the ratings agency said in a statement.
National Amusements, the holding company that controls ViacomCBS, on Thursday said it agreed to terms with its lenders to refinance its $125 million revolving credit facility and cancel a $75 million revolver at a subsidiary, NAI Entertainment Holdings.
S&P Global Ratings earlier this month put National Amusements on credit watch, signaling it was considering a debt ratings downgrade as it cited the technical debt covenant's violation and business trends.
The ratings agency on Friday said it could remove National Amusements from its credit watch "as we receive additional information about the length of the theater closures and any potential changes to ViacomCBS' dividend policy, which could lead to a liquidity deficit."
