S&P lifts Hoyts to positive

Standard & Poor’s said it revised the outlook to positive from stable on Hoyts Group Holdings LCC.

The agency also said it affirmed the company’s B corporate credit rating, along with the B+ rating with 3 recovery rating and CCC+ rating with 6 recovery rating on its senior secured and subordinated debt issued by its subsidiaries US Finco LLC and Aufinco Pty Ltd.

The positive outlook primarily reflects an expectation that the company’s strong film product released during the second half of the year should offset its soft revenues for the first half, S&P said.

The positive outlook also considers the company’s improved margins from cost-cutting, the agency said.

Private Chinese entity ID Leisure Ventures took control of Hoyts in December 2014, which removed the previous constraint of private-equity ownership on the group’s prospective credit profile, S&P said.

But, there is a lack of clarity regarding the new owner’s financial policies, the agency added.

The ratings are constrained by the company’s relatively small earnings base, exposure to fluctuating popularity of feature films and growing competition, S&P said.

Tempering these weaknesses is the relatively concentrated structure of the Australian and New Zealand cinema-exhibition market, the agency said.

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