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January 14, 2008 |
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IMAX CORP: Moody's Changes Outlook; Affirms Junk Ratings Moody's Investors Service has changed the outlook for IMAX Corporation to stable from positive indicating that an upgrade over the near term is less likely. IMAX Corp. recently announced a joint-venture agreement to install 100 digital projection systems at AMC Entertainment, Inc., locations across the United States. Moody's believes that while this agreement should contribute to an increase in enterprise value and improve cash flow visibility over the long term, it will require substantial upfront cash investments, straining the company's limited liquidity over the next couple of years. Furthermore, the widescale rollout of the digital systems poses execution risk. The company has not installed any digital theaters to date and expects to nearly double its U.S. theater base over the next several years with the AMC Entertainment deal, as well as expanding its presence through other sales and joint ventures involving digital systems in the U.S. and internationally. Moody's also affirmed the Caa1 corporate family and the Caa1 probability of default ratings for IMAX Corp. as well as the Caa2 rating on its senior unsecured bonds. Ratings List: -- Outlook, Changed To Stable From Positive -- Corporate Family Rating, Affirmed at Caa1 -- Probability of Default Rating, Affirmed at Caa1 -- Senior Unsecured Bonds, Affirmed at Caa2, LGD 4, 60% The Caa1 corporate family rating reflects high financial risk and the lack of visibility regarding IMAX Corp.'s long term cash flow prospects, as well as execution risk related to the strategic transition to increased use of joint ventures and the rollout of the new digital system. A highly enforceable backlog of signed contracts, recent positive business indicators -- including increased system signings and film slate announcements -- and the value of the IMAX brand support the ratings. Based in New York City and Toronto, Canada, IMAX Corporation (NASDAQ:IMAX) -- http://www.imax.com/ -- is an entertainment technology company, with emphasis on film and digital imaging technologies including 3D, post-production and digital projection. IMAX is a fully-integrated, out-of-home entertainment enterprise with activities ranging from the design, leasing, marketing, maintenance, and operation of IMAX(R) theatre systems to film development, production, post- production and distribution of large-format films. IMAX also designs and manufactures cameras, projectors and consistently commits significant funding to ongoing research and development. IMAX has locations in Guatemala, India, Italy, among others. |
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