New York, March 20, 2020 -- Moody's Investors Service (Moody's) downgraded Cedar Fair, L.P.'s
(Cedar Fair) Corporate Family Rating (CFR) to B1 from Ba3 and the Probability
of Default Rating (PDR) to B1-PD from Ba3-PD. The
senior unsecured notes were downgraded to B2 from B1. In addition,
all ratings, including the Ba1 senior secured debt ratings,
were placed on review for downgrade. The rating outlook was changed
from stable to ratings under review.
The ratings were downgraded and placed under review due to the coronavirus
outbreak's impact on Cedar Fair's ability to operate its amusement
parks as normally scheduled as well as the effect on the overall economy
and consumer sentiment. Cedar Fair announced that three of its
parks will be closed and the opening of three other parks will be delayed
until the end of March. There is also elevated risk that the openings
will be further delayed which could substantially erode operating performance
and significantly pressure liquidity over the remainder of 2020.
A summary of Moody's actions are as follows:
..Issuer: Canada's Wonderland Company
....Senior Secured Revolving Credit Facility,
Placed on Review for Downgrade, currently Ba1 (LGD2)
..Issuer: Cedar Fair, L.P.
.... Corporate Family Rating, downgraded
to B1 from Ba3, Placed on Review for Downgrade
.... Probability of Default Rating,
downgraded to B1-PD from Ba3-PD, Placed on Review
for Downgrade
....Senior Secured Term Loan B, Placed
on Review for Downgrade, currently Ba1 (LGD2)
....Senior Secured Revolving Credit Facility,
Placed on Review for Downgrade, currently Ba1 (LGD2)
....Gtd Senior Unsecured Regular Bond/Debentures,
downgraded to B2 (LGD5) from B1 (LGD5), Placed on Review for Downgrade
Outlook Actions:
..Issuer: Canada's Wonderland Company
....Outlook, changed to Rating Under
Review From Stable
..Issuer: Cedar Fair, L.P.
....Outlook, changed to Rating Under
Review From Stable
RATINGS RATIONALE
The ratings downgrade and the review for further downgrade reflect the
coronavirus' impact on Cedar Fair's ability to open their amusement parks
and the negative pressures on the overall economy. The review will
focus on the depth and duration of the park closures, quarterly
cash usage, and Cedar Fair's liquidity position over the remainder
of 2020 and beyond. Cedar Fair operates a portfolio of regional
amusement parks that historically generate substantial attendance (27.9
million in 2019) and good EBITDA margins. Sizable reinvestment
is typically necessary to maintain a competitive service offering as attendance
is exposed to competition from an increasingly wide variety of other leisure
and entertainment activities as well as cyclical discretionary consumer
spending. Results are also highly seasonal and sensitive to weather
conditions and event risk.
The rapid and widening spread of the coronavirus outbreak, deteriorating
global economic outlook, falling oil prices, and asset price
declines are creating a severe and extensive credit shock across many
sectors, regions and markets. The combined credit effects
of these developments are unprecedented. The amusement park sector
could be one of the sectors most significantly affected by the shock given
its sensitivity to consumer demand and sentiment. More specifically,
the weaknesses in Cedar Fair's credit profile, including its
exposure to shifts in market sentiment in these unprecedented operating
conditions and Cedar Fair remains vulnerable to the outbreak continuing
to spread. We regard the coronavirus outbreak as a social risk
under our ESG framework, given the substantial implications for
public health and safety. Today's action reflects the impact
on Cedar Fair of the breadth and severity of the shock, and the
broad deterioration in credit quality it has triggered.
The principal methodology used in these ratings was Business and Consumer
Service Industry published in October 2016. Please see the Rating
Methodologies page on www.moodys.com for a copy of this
methodology.
Cedar Fair, L.P. (Cedar Fair), headquartered
in Sandusky, Ohio, is a publicly traded Delaware master limited
partnership (MLP) formed in 1987 that owns and operates amusement parks,
waterparks, and hotels in the U.S. and Canada.
Properties include Cedar Point (OH), Knott's Berry Farm (CA),
Kings Island (OH), and Canada's Wonderland (Toronto). In
June 2006, Cedar Fair acquired Paramount Parks, Inc.
from CBS Corporation for a purchase price of $1.24 billion.
In 2019, Cedar Fair bought two waterparks in Texas for approximately
$261 million. Revenue for the LTM ending Q4 2019 was approximately
$1.5 billion.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Scott Van den Bosch
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Stephen Sohn
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
