S&P downgrades Rank Group

Standard & Poor's said it lowered its long- and short-term corporate credit ratings on The Rank Group plc to BB-/B from BBB-/A-3 and removed the ratings from CreditWatch with negative implications, where they were placed on Oct. 6. The outlook is stable.

The downgrade follows Rank's disposal of its film-processing unit, Deluxe Film, and the company's substantially higher leverage combined with a more aggressive financial policy, the agency said. Rank plans to return just under one-half of total net disposal proceeds of £420 million to shareholders.

S&P said the ratings reflect Rank's satisfactory business profile, based on its solid competitive positions and the relatively stable cash-generative characteristics of its bingo and casino assets, as well as additional cash contributions from the company's Hard Rock Cafe franchise.

These factors are offset by the Hard Rock Cafe's reliance on the cyclical global tourism industry, along with the company's operating and business development challenges in the mature and competitive U.K. gaming sector and weak demographic trends in the bingo business, the agency said.

Pro forma for the Deluxe Film disposal and the £200 million return of funds to shareholders, Rank has a net debt position of around £1 billion and a net debt to EBITDA ratio of about 5x.

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