The downgrade reflects a number of challenges the system is facing such as weak financial performance in fiscal 2014 and high debt leverage, with 66 percent debt to revenue and 5.1 times debt to cash flow.
The system’s strengths, including its ample absolute unrestricted cash balance and its growing and dominant market share, were also considered for the rating downgrade.
Although a rating upgrade is unlikely for the system in the near future, Reading’s rating may be upgraded over the longer term if it restores and sustains operating performance levels consistent with “Aa3” rated medians, reduces its leverage and maintains a strong balance sheet while continuing to make strategic capital investments.
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