S&P rates Motion Picture Distribution loans B, CCC+

Standard & Poor's said it assigned its B long-term corporate credit rating to Motion Picture Distribution FinCo, a company formed to enable sponsors GS Capital Partners VI LP and EdgeStone Capital Partners to acquire the Movie Distribution Income Fund for about C$475 million including the repayment of company debt.

The agency also rated the issuer's planned C$410 million senior secured bank facility, with the C$50 million first-lien revolver and C$260 million first-lien term loan B both at B with a recovery rating of 3, and the C$100 million second-lien term loan at CCC+ with a recovery rating of 6.

The outlook is negative.

Proceeds from the bank facilities will help fund the purchase.

The corporate credit rating assignment follows S&P's analysis of GSCP's and EdgeStone's proposed acquisition of the Movie Distribution Income Fund in a private transaction, the agency said.

The ratings reflect high financial risk profile resulting from the proposed leveraged acquisition, weak operating performance in the past couple of years, lack of business diversity and customer concentration, S&P said.

The company's pro forma debt-to-EBITDA ratio for 2007 is weak at almost 6 times, the agency said.

The negative outlook reflects concerns that financial and business risk profiles could weaken because of lower revenue and EBITDA resulting from the loss of an important contract, technological shifts that decrease the viability or margins of the current distribution business model, the departure of a key senior manager or a weak motion picture slate, the agency said.

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