{"id":15092,"date":"2025-10-24T10:24:30","date_gmt":"2025-10-24T10:24:30","guid":{"rendered":"https:\/\/infundpros.com\/?p=15092"},"modified":"2025-10-24T10:24:31","modified_gmt":"2025-10-24T10:24:31","slug":"blackstone-backed-theme-park-giant-under-pressure-after-debt-sell-off","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=15092","title":{"rendered":"Blackstone-backed theme park giant under pressure after debt sell-off"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=38b278bc-e31f-409f-973c-0e4e878089bf\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Blackstone-backed Merlin Entertainments is under increasing financial strain ahead of a critical refinancing, as the Legoland-owner\u2019s weak performance has led to a sell-off in its bonds and heightened fears over a potential restructuring.<\/p>\n<p>On Tuesday Moody\u2019s downgraded Merlin, which also owns Madame Tussauds and the London Eye, further into junk territory. <\/p>\n<p>The rating agency noted that \u201cmaintaining a sustainable capital structure will be challenging without further asset disposals or shareholder support,\u201d as it cut Merlin\u2019s rating to Caa1, seven notches below investment grade.<\/p>\n<p>Merlin has struggled with rising operating costs and subdued consumer spending since it was taken private in a \u00a36bn leveraged buyout in 2019 \u2014 a deal that left the group saddled with more than \u00a34bn of debt. As of the end of 2024 Merlin operated 135 attractions in 22 countries.<\/p>\n<p>Bonds issued by the leisure group have sold off in recent months, ahead of a refinancing of \u00a3630mn of debt maturing in 2027. Merlin\u2019s safest senior secured bonds, which were trading at par in March, now trade at 86 cents on the dollar.<\/p>\n<p>One high-yield bond trader said Merlin had been hit by a \u201cperfect storm,\u201d including a \u201charsh business environment, plus there\u2019s high new capex needed, and an upcoming finance need\u2009.\u2009.\u2009.\u2009it needs a restructuring, big time\u201d, he added. <\/p>\n<figure class=\"n-content-image n-content-image--full\" data-component=\"image-set\"><picture><source media=\"(min-width: 700px)\"  width=\"2289\" height=\"1525\"><\/source><\/picture><figcaption class=\"n-content-picture__caption o3-editorial-typography-caption\"><span>Merlin shelved plans to sell its British aquariums this summer<\/span><span> <!-- -->\u00a9 Anna Gordon\/FT<\/span><\/figcaption><\/figure>\n<p>The year after Merlin was taken private \u2014 by a consortium of Blackstone, Canadian pension fund CPPIB and Kirkbi, the investment vehicle of Lego\u2019s founding family \u2014 it was forced to close all but nine of its 130 sites when the Covid-19 pandemic struck.<\/p>\n<p>Merlin subsequently turned to bond markets to raise \u20ac500mn of emergency funding. <\/p>\n<p>Moody\u2019s downgrade this week comes two months after a downgrade from another rating agency, S&amp;P, which warned that Merlin could run low on cash next year as a result of depressed earnings and interest expenses.<\/p>\n<p>Merlin\u2019s pre-tax losses more than doubled to \u00a3492mn in 2024 after it wrote down the value of some of its largest assets by \u00a3384mn, including a \u00a3163mn impairment of Madame Tussauds.<\/p>\n<p>Alongside struggles at Merlin\u2019s long-held assets, the company has said returns generated by Legoland New York and Legoland Korea, which opened in 2021 and 2022 respectively, have failed to meet expectations. <\/p>\n<p>Helen Rodriguez, head of special situations at CreditSights, said that Merlin\u2019s profitability was being \u201cgnawed away\u201d by \u201cunder-investment, tired and less relevant assets, a downturn in US visitor numbers across the sector and a weak UK consumer\u201d.<\/p>\n<p>Merlin\u2019s \u201cscattergun overexpansion\u201d had forced it to look at dialling back its sprawling portfolio, Rodriguez added.<\/p>\n<p>Multiple restructuring advisers said Merlin was on their watchlist, while several credit investors questioned the sustainability of its capital structure.<\/p>\n<p>Merlin said it was improving profitability and its \u201csmart spending\u201d programme would generate roughly \u00a350mn of annual cost savings.<\/p>\n<p>\u201cMerlin continues to maintain a healthy operating cash flow with ample liquidity\u2009.\u2009.\u2009. and continues to invest in capex in support of the long-term growth of the business,\u201d the company said.<\/p>\n<p>The company is due to receive around \u00a3200mn from the sale of 29 Lego Discovery Centres to\u2009the Lego Group by early 2026. It shelved the sale of its British aquariums this summer after bids fell short of expectations. <\/p>\n<p>Merlin appointed new CEO Fiona Eastwood this year to lead what it has called a \u201ctransformational strategy\u201d that will refocus the company on its key attractions. <\/p>\n<p>A spokesperson for Blackstone and Kirkbi said: \u201cWe have confidence in Merlin and its management team, and believe the financial profile of the business will continue to strengthen.\u201d<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/38b278bc-e31f-409f-973c-0e4e878089bf\" target=\"_blank\" rel=\"noopener\" rel=\"nofollow\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Blackstone-backed Merlin&#8230;<\/p>\n","protected":false},"author":1,"featured_media":15093,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-15092","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Blackstone-backed theme park giant under pressure after debt sell-off | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Blackstone-backed Merlin\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=15092\" 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