Moody's rates Regal Cinemas

Moody's Investors Service said it assigned Ba3 ratings to the proposed new senior secured bank credit facilities being arranged for Regal Cinemas Corp., a wholly owned subsidiary or Regal Entertainment Group.

More specifically, Moody's confirmed Regal Entertainment Group's $240 million of 3¾% senior unsecured convertible notes due 2008 at B3, senior implied rating at Ba3, and issuer rating at B3. Moody's also rated Regal Cinemas Corp.'s $100 million senior secured revolver due 2009 and $1.65 billion senior secured term loan B due 2010 both at Ba3.

Finally, Moody's changed the outlook for the company to negative from stable given the incremental financial risk being absorbed by creditors in favor of shareholders pro forma for the planned (second) special dividend payment, which will also be financed by most of the remaining net proceeds from the new term loan.

Moody's said its rating actions, and particularly the shift to negative outlook, follow Regal's announcement that it plans to pay an additional $710 million special dividend to shareholders, the second such dividend of this magnitude within just the past year.

The company continues to pay out more in dividends than it generates in cash, and this second "extraordinary" dividend is additive not just to the first, but also to growing regular quarterly dividend payments.

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