S&P Global Ratings has put National Amusements, the holding company controlled by the Redstone family, on credit watch after it drove the merger of Viacom and CBS
S&P Global Ratings cited a steep fall in ViacomCBS share price and"weak expected theater attendance" for debt covenant violations.
The ratings agency said National Amusements has violated a "minimum collateral covenant on its debt" owing to recent declines in ViacomCBS' share price. ViacomCBS shares have dropped from around $35 on Feb. 19 to trade at $20.28 in late afternoon trading on March 10, and have fallen 51 percent year-to-date.
"Additionally, we expect the spread of the new coronavirus to negatively affect theater attendance in 2020 as movie releases are delayed and consumers increasingly avoid public areas," S&P Global Ratings said in a statement. "While the decline in the value of the collateral package is substantial, we believe the company has sufficient assets to cure its covenant violations by adding more shares to the collateral package, using cash on hand to reduce its outstanding debt, or by amending the credit agreement to provide additional headroom," the agency argued.
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