S&P downgrades CORE

Standard & Poor’s said it lowered the corporate credit rating on CORE Entertainment Inc. to CCC+ from B and removed the rating from CreditWatch, where they were placed with negative implications in March.

The agency also said it lowered the ratings on the company’s $200 million senior secured first-lien term debt due 2017 to CCC+ from B+ and on its $160 million 13½% bank loan due 2018 to CCC- from CCC+.

S&P also said it revised the recovery rating on the first-lien debt to 4 from 2 because the agency lowered the emergence valuation for the company. The 4 recovery rating indicates 30% to 50% expected default recovery.

The recovery rating on the second-lien debt remains at 6, indicating 0 to 10% expected default recovery.

The outlook is negative.

The agency also said it removed the ratings from CreditWatch, where they were placed with negative implications in March 2014.

The downgrades reflect the significantly weakening operating performance as continued audience-ratings decline for the company’s aging flagship television show, American Idol, S&P said.

This has led to precipitous declines in revenues and cash flow, the agency said.

While these declines could moderate in 2015 and 2016, S&P said it expects the company will generate negative discretionary cash flow and could exhaust its sole source of liquidity by early 2017.

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