Moody's rates AMC loan B3, cuts Marquee view to negative

Moody's Investors Service said it changed the outlook for Marquee Holdings Inc. to negative from stable and affirmed the company's corporate family and probability-of-default ratings at B1 and its senior unsecured bonds at B3 (LGD5, 87%).

The agency also assigned a B3 (LGD6, 93%) rating to the proposed senior unsecured bank credit facility of AMC Entertainment Holdings, Inc., newly created entity that will become the parent of Marquee; upgraded AMC Entertainment, Inc.'s senior subordinated bonds to B2 (LGD5,73%) from B3; and affirmed AMC Entertainment's senior secured bank credit facility at Ba1 (LGD2, 12%) and its senior unsecured bonds at Ba3 (LGD3, 34%).

Proceeds from the proposed bank facility will be used to fund a dividend to Marquee's current stockholders.

The agency said the negative outlook reflects concerns over the increase in the debt-to-EBITDA ratio to 7.2x from 6.7x and Moody's view the transaction creates no value for creditors and represents a reversal from the commitment to improving Marquee's credit profile that management demonstrated by repaying debt with proceeds from the National CineMedia transactions.

The upgrade of the notes follows the announcement of the proposed bank credit facility and results from the introduction of this junior-ranking claim of size to the company's consolidated capitalization because the loss-given-default estimate is lower, the agency said.

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