S&P: Regal Entertainment outlook negative

Standard & Poor's said it revised its outlook on Regal Entertainment Group and subsidiary Regal Cinemas Inc., which are analyzed on a consolidated basis, to negative from stable.

The action follows the company's announcement that it plans to pay an extraordinary $710 million debt-financed dividend, its second significant, special shareholder payout in the past year.

At the same time, S&P affirmed its BB- corporate credit rating on the company.

The Knoxville, Tenn.-based movie theater chain is expected to have slightly more than $2 billion in pro forma debt. Ratings on the company's proposed $1.35 billion bank facility and $400 million in notes will be assigned based on further disclosure and analysis of the expected terms, the agency said.

S&P said the ratings reflect the mature and highly competitive nature of the movie exhibition industry, its exposure to the fluctuating popularity of Hollywood films, and Regal's high leverage and aggressive financial polices. These concerns are partially mitigated by the company's geographically diverse and relatively high quality theater circuit, good profit margins, and still substantial discretionary cash flow.

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