S&P May Increase Deluxe Credit Rating on Perelman Cash InjectionMatt Robinson
Standard & Poor’s placed Deluxe Entertainment Services Group Inc.’s credit rating on watch for an increase after owner MacAndrews & Forbes Holdings Inc., the private-equity firm controlled by billionaire Ron Perelman, injected $100 million in the form of debt and equity.
The extra capital “will provide the company relief from likely leverage covenant violations,” S&P said in a statement today. The credit rater lowered the company’s grade three levels to CCC last month on concern its deteriorating finances would knock it out of compliance with its lending terms.
Perelman is propping up the Hollywood venture that started processing film almost 100 years ago. The company, which converted the blockbuster movie Titanic to 3-D, has struggled to keep up with the changing digital media landscape.
“This capital will greatly enhance Deluxe’s ability to deliver a 100 percent digital experience to a wide range of clients and represents a show of confidence by MacAndrews & Forbes in Deluxe’s growth strategy,” Paul Meister, president of New York-based MacAndrews & Forbes, said in a statement today.
Christine Taylor, a spokeswoman at MacAndrews & Forbes, declined to comment on S&P’s action.
Without the new capital or a lender waiver, S&P estimated last month that Deluxe would violate its covenant agreement as soon as the end of this month.
The company’s revenue fell 8 percent in the first half of the year while earnings before interest, taxes, depreciation and amortization declined 32 percent, according to an Aug. 21 S&P report.