S&P puts Regal on negative watch

Standard & Poor's said it placed all ratings on Regal Entertainment Group and its operating subsidiary Regal Cinemas Corp. on CreditWatch with negative implications.

The affected ratings include the B+ corporate credit rating, the BB issue-level rating on the company's senior secured credit facility and the B- issue-level rating on the senior unsecured notes. The recovery ratings on the debt issues remain unchanged.

S&P said the CreditWatch placement follows the company's Oct. 27 announcement that it is exploring strategic alternatives, including the potential sale of the company.

"Given Regal's size and market share, we believe a potential sale to another large U.S. circuit is unlikely, since it would face intense regulatory scrutiny and require extensive divestitures," S&P credit analyst Jeanne Shoesmith said in a news release.

"If the company is sold, we believe the buyer would likely be a financial buyer that operates on a debt-financed investment return strategy and that this could significantly increase financial risk."

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