Fitch lifts Regal convertibles, rates notes B+

Fitch Ratings said it assigned a B+/RR4 rating to Regal Cinemas Corp.'s proposed $250 million note offering and upgraded Regal Entertainment Group's senior unsecured convertible notes to B-/RR6 from CCC/RR6. The B+ issuer default ratings of both companies were affirmed, as were Regal Cinemas' BB+/RR1 senior secured credit facility and B+/RR4 senior unsecured notes.

The outlook is stable.

The proceeds of the new notes, together with proceeds from a new senior secured credit facility, are expected to be used to repay the current senior secured credit facility, repurchase the $52 million balance on Regal Cinemas' subordinated notes and for general corporate purposes, which may include the repayment or repurchase of other debt.

The agency said the upgraded rating on Regal's convertibles reflects the notes' new position in the capital structure after the repayment of Regal Cinemas' subordinated notes and Fitch's expectation for zero recovery.

The new senior secured credit facility will move the maturity of the term loan to November 2016 from October 2013. Fitch said it views this as a positive to the credit, providing an improvement in the company's near-term maturity schedule.

As of March 31, unadjusted gross leverage was 3.8 times.

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