Moody's rates National Amusements notes B1

Moody's Investors Service said it assigned a B1 corporate family rating and a B2 probability-of-default rating to NAI Entertainment Holdings LLC, a wholly owned subsidiary of National Amusements Inc.

Moody's assigned B1 ratings (LGD3, 32%) to the company's senior secured notes, which refinances debt at National Amusements.

NAI was also assigned an SGL-2 speculative grade liquidity rating.

The outlook is stable. NAI holds nearly all of National Amusements' cinema assets plus a portion of its equity interests in CBS Corp. and Viacom Inc.

On one hand, NAI is a small cinema operator with weak financial performance, little free cash flow and a complex legal entity and management structure, the agency said.

However, NAI is also an investment company with - in proportion to its debt - considerable asset value stemming from holdings in CBS and Viacom, the agency noted.

Ratings reflect the relatively high default risk resulting from NAI's weak cash flow generating capability, while also reflecting outsized recovery prospects in the event of a default, Moody's said.

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