New York, June 30, 2021 -- Moodys Investors Service, (Moodys) upgraded Cast & Crew Payroll, LLCs (Cast & Crew) corporate family rating (CFR) to B3 from Caa1 and its probability of default rating (PDR) to B3-PD from Caa1-PD. Concurrently, Moodys upgraded the rating on the issuers senior secured first lien credit facility to B2 from B3. The outlook is stable.

The upgrade was driven by Moodys expectation of continued sequential recovery in Cast & Crews operating performance over the coming 12 months as growing television and film content production and anticipated near term reopenings of theatre and other live entertainment venues fuel increased demand for the companys services.

Upgrades:

..Issuer: Cast & Crew Payroll, LLC

.... Corporate Family Rating, Upgraded to B3 from Caa1

.... Probability of Default Rating, Upgraded to B3-PD from Caa1-PD

....Gtd Senior Secured First Lien Bank Credit Facility, Upgraded to B2 (LGD3) from B3 (LGD3)

Outlook Actions:

..Issuer: Cast & Crew Payroll, LLC

....Outlook, Remains Stable

RATINGS RATIONALE

Cast & Crews B3 CFR is principally constrained by the companys still elevated debt leverage which Moodys expects to moderate, but remain high over the coming 12 months. Cast & Crews credit quality is also negatively impacted by its relatively small revenue base and the companys concentrated exposure to the somewhat cyclical media and entertainment sector which also remains vulnerable to considerable operational disruption related to the coronavirus pandemic. Risks related to the companys ability to effectively manage workers compensation insurance claims as well as corporate governance concerns related to Cast & Crews concentrated private equity ownership by affiliates of EQT (EQT) also negatively impact the companys credit profile. These uncertainties are somewhat mitigated by Cast & Crews entrenched position within its niche market, long term customer relationships, and specialized industry expertise as a provider of payroll processing, production accounting, and related services for media and entertainment companies. The companys credit profile is also bolstered by historically strong top-line growth trends and Cast & Crews solid profitability which collectively should fuel deleveraging efforts.

Despite Moodys concern that Cast & Crew may be unable to generate free cash flow over the coming year (due to a sizeable deferred Social Security payment scheduled for early FY22), the companys good liquidity position reflects an unrestricted cash balance of $207 million as of March 31, 2021. Liquidity is also bolstered by the companys undrawn $90 million revolving credit facility maturing in 2024. The companys first lien term loan is not subject to a financial maintenance covenant while the revolving credit facility has a springing covenant that is not expected to be in effect over the next 12-18 months as excess availability should remain comfortably above minimum levels.

The stable ratings outlook reflects Moodys expectation that Cast & Crews revenues and EBITDA will recover at a healthy pace in the coming 12 months from coronavirus related softness in the early part of FY21. Based on this projection, Moodys expects debt-to-EBITDA (Moodys adjusted) to moderate from elevated levels during this period while the company sustains healthy cash flow trends (exclusive of unusual working capital fluctuations).

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The ratings could be upgraded if Cast & Crew expands revenues and EBITDA to sustain meaningful deleveraging and increases free cash flow to debt above 5%.

The ratings could be downgraded if revenue or EBITDA contracts materially from current levels, the company begins to generate weak or negative free cash flow, or liquidity deteriorates.

Cast & Crew, owned by affiliates of EQT, is a leading provider of technology-enabled payroll processing, production accounting software, workers compensation coverage, and related value-added services to clients across the entertainment industry.

The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moodys key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moodys Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moodys rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support providers credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moodys general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moodys affiliates outside the EU and is endorsed by Moodys Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moodys office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moodys affiliates outside the UK and is endorsed by Moodys Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moodys office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moodys legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Lee Zeltser
Vice President - Senior Analyst
Corporate Finance Group
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Karen Nickerson
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.

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