Print | Share | Reprint

Blackstone extracts another dividend from SeaWorld

by David Holley | Published March 14, 2012 at 2:16 PM

SeaWorld Parks & Entertainment Inc. is paying a sponsor group led by Blackstone Group LP a second dividend in nine months: a $500 million distribution through a $500 million add-on to its existing term loan, which was made public late Tuesday, March 13.

Add that to the $100 million distribution Moody's Investors Service said SeaWorld paid Blackstone in the third quarter of 2011, and at $600 million Blackstone is nearly two-thirds of the way to regaining the $975 million in equity it injected into the $2.4 billion leveraged buyout of SeaWorld, then known as Busch Entertainment Corp.

Ratings agencies remain cautious about Blackstone's push to regain its equity stake through distributions. Moody's lowered Orlando, Fla.-based SeaWorld's corporate family rating and probability of default rating from Ba3 to B1, estimating SeaWorld's debt-to-Ebitda leverage is 5.5 times for 2011.

"The magnitude of the distributions and the resulting higher leverage profile over the next several years are above the levels factored into the prior corporate family rating," Moody's wrote in a March 13 note.

Standard & Poor's downgraded SeaWorld to a B+ from BB- corporate rating.

SeaWorld's existing loans, which came onto its books after the Blackstone leveraged buyout in 2009, are coming due in 2016 or 2017. They include a $172.5 million revolver, a $160 million term loan A and an $844 million term loan B, according to the ratings agencies. The $500 million add-on will increase the term loan B to $1.344 billion, which is due in August 2017.

Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank AG, Goldman, Sachs & Co., J.P. Morgan Chase & Co. and Macquarie Group Ltd. launched the add-on Tuesday afternoon, with an issue price of 98.75-99, according to a source. The add-on has the same pricing terms as the original term B loan, at LIBOR plus 300 basis points, with a 1% LIBOR floor, the source said. The lead banks are offering a 15-basis-point consent fee, the source said.

S&P said it expects SeaWorld to maintain an "aggressive" financial policy for the near-term, with debt-to-Ebitda remaining around 5 times. Moody's said it expects the company free cash flow to be targeted toward distributions and acquisitions, with limited debt reduction.

SeaWorld may have generated enough growth to sustain this lifestyle. S&P said that, based on preliminary results, revenue grew 9.6% in 2011, while Ebitda grew 18.3%. The company's trailing 12 month revenue was $1.3 billion for the period ended Sept. 30, 2011, according to Moody's.

Blackstone bought SeaWorld from beer giant Anheuser-Busch InBev NV. Blackstone did not return a request for comment.

Share:

Private Equity

Blackstone extracts another dividend from SeaWorld

Free preview

Meet the journalists

David Holley

Reporter, private equity

Movers & Shakers

Video

Coming back for more

Sectors