S&P upgrades Six Flags

Standard & Poor’s said it affirmed the BB corporate credit rating on Six Flags Entertainment Corp.

The outlook is stable.

The agency also said it raised the rating on the company’s first-lien credit facility, consisting of a $200 million revolver due 2016 and a $572 million term loan B due 2018, to BBB- from BB+. S&P also said it revised the recovery rating to 1 from 2 on the first-lien facility. The 1 recovery rating reflects 90% to 100% expected default recovery.

The higher recovery rating is a result of a reassessment of the company’s estimated EBITDA at emergence, reflecting a higher normalized level of operating performance upon emergence from a simulated bankruptcy, S&P said.

The agency also said it affirmed the BB- rating on the company’s $800 million senior unsecured notes due 2021 with a 5 recovery rating, indicating 10% to 30% expected default recovery.

The ratings reflect the company’s satisfactory business risk profile and its significant financial risk profile, S&P said.

The company has good geographic diversity and there are relatively high barriers to entry in the theme park space, the agency said.

Partially offsetting these factors is Six Flags’ reliance on consumer discretionary spending, which can be volatile through economic cycles, S&P said.

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