Some bad news for CORE Entertainment Inc, the company that owns American Idol and SYTYCD. It has been downgraded by Moody’s Investor’s Service. From a press release:
New York, June 18, 2015 — Moody’s Investors Service (Moody’s) downgraded CORE Entertainment Inc.’s (CORE) corporate family rating (CFR) to Caa3 from Caa1 and the 1st lien term loan was downgraded to Caa1 from B2. The 2nd lien term loan was downgraded to Ca from Caa2. The outlook remains negative.
The downgrade reflects that the company has entered into an interest grace period with its 2nd lien loans. Also included in the rating decision, is the continued decline in ratings and revenue from American Idol (Idol), the non-renewal of Idol on Fox after the 2016 season, as well as the lack of progress replacing the EBITDA lost following the sale of Elvis Presley Enterprises (Elvis) and Muhammad Ali Enterprises. The company’s negative expected free cash flow is anticipated to lead to further declines in the company’s $82 million cash balance (as of Q1 2015) barring a significant reduction in its interest expense.
A summary of today’s rating actions are listed below:
Issuer: CORE Entertainment Inc.
- ..Corporate Family Rating, downgraded to Caa3 from Caa1
- ..Probability of Default Rating, downgraded to Ca-PD from Caa1-PD
- ..$200 million Senior Secured 1st Lien Term Loan due 2017, downgraded to Caa1 (LGD2) from B2 (LGD2)
- ..$160 million Senior Secured 2nd Lien Term Loan due 2018, downgraded to Ca (LGD4) from Caa2 (LGD5)
- ..Outlook, Negative
I’m no financial expert, but I from my experience working for a company that was similarly downgraded, it will make it tough for the company to secure more loans. And if they do, the interest rate will be higher. Click to Read more about CORE’s downgrade.
In 2014, CORE Media Group entered into a joint venture with Endemol, and Shine group. CORE’s management operations were set to be absorbed into Endemol North America, the company that owns Big Brother, Deal or No Deal, and other reality properties.