Century Theatres' $360 million term loan "B" broke at 101 and traded up a quarter of a point last week. A trader said the credit traded well despite the generally poor conditions in the movie theater industry. Morgan Stanley leads the deal, which also consists of a $75 million revolver. The term loan is priced at LIBOR plus 1 7/8%, while the revolver is priced at LIBOR plus 2%.
Century Theatres will use the term loan to pay off existing debt and to fund a $235 million special dividend to shareholders. The company will have $440 million in debt and $291 million in present value of operating leases following the debt issuance, according to Standard & Poor's. The ratings agency assigned a B+ and 3 recovery rating to the secured credit facility. The ratings reflect the company's geographic concentration in the western and midwestern states of the U.S., its high leverage and its participation in the movie theater industry, which suffered in 2005 because of weak movie attendance. The ratings agency added that Century's plan to build new theaters in the next few years should boost EBITDA, but will also be a cash drain in the short term. A Century spokeswoman did not return calls.