Moody's adds LD to Vue rating

Moody's Investors Service said it appended a limited default (/LD) designation to Vue International Bidco plc’s Ca-PD probability of default rating changing it to Ca-PD/LD from Ca-PD. The agency will remove the /LD designation from the company's PDR after three business days.

The /LD designation follows the company's announcement on Thursday that it completed its balance sheet restructuring, the agency said.

The transaction included the equitization of £225 million of first-lien debt, representing 28% of the pre-restructuring balance of the senior debt and the write-off of all the second-lien debt, which had totaled £245 million including accrued interest.

Following the restructure, Vue's borrowings comprise the €94.83 million super senior secured term loan due June 30, 2027, and the reinstatement of the euro-equivalent €648.62 million senior secured term loan maturing Dec. 31, 2027, both of which are borrowed by Vue Entertainment International Ltd.

“Moody's considers the transaction as a distressed exchange under its definition of default, which is intended to capture events whereby issuers fail to meet debt service obligations outlined in their original debt agreements.

Moody's sees the restructuring as benefiting Vue's liquidity position in the short term. However, the transaction is not transformational for Vue's capital structure as leverage (measured as Moody's-adjusted debt to EBITDA) and interest expense remain high. Moody's expects Vue will continue to burn cash through the next 12 months,” the agency said in a press release.

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