Fitch rates Regal notes B-

Fitch Ratings said it assigned a B-/RR6 rating to Regal Entertainment Group's proposed issuance of additional 9.125% senior notes due 2018, affirmed its B+ issuer default rating and upgraded its subsidiary Regal Cinemas Corp.'s senior notes to BB-/RR3 from B+/RR4.

The outlook is stable.

Proceeds of the notes are expected to be used to redeem a portion of Regal Cinemas' senior secured credit facility and for general corporate purposes.

The upgrade reflects the notes improved recovery prospects from an expected 35% to 67% recovery, following the proposed offering and partial redemption of the senior credit facility, Fitch said.

The ratings reflect Regal's size and position as the largest domestic movie exhibitor, the belief that movie exhibition will continue to be a key promotion window for the movie studios biggest and most profitable releases, the expectation that box office revenue for 2011 will be fueled by the premium pricing charged on 3-D films and relatively stable concession revenues, the agency said.

The ratings also consider the intermediate and long-term risks associated with increased competition from at-home entertainment media, limited control over revenue trends, the pressure on film distribution windows and high operating leverage, Fitch said.

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