Apr 24, 2020

Legoland owner turns to bond market for lifeline

The operator of Legoland and Madame Tussauds is raising £500m in new bonds, with the private equity-backed Merlin Entertainments seeking urgent funding to see it through a near total shutdown of its theme parks and attractions. Merlin announced plans on Friday to raise money from debt investors, with the proceeds earmarked for working capital, funding operational costs, capital expenditures and paying the £12m-a-month interest bill on its debt pile of more than £4bn. The funding would represent a liquidity lifeline for a company suffering from the coronavirus pandemic that has closed all but nine of its 130 sites. The bond's documents include stark warnings about the company's ability to weather the coronavirus crisis, including a so-called "Going concern" warning from auditors KPMG. Merlin is also telling investors that "It is not possible to accurately predict the medium- or long-term impact of Covid-19 on our business and our industry". One bond investor looking at the deal described the recent shutdown of its theme parks and attractions as "Absolutely the worst case" for Merlin. Carnival, the cruise company, launched a $4bn bond sale this month backed by its ships as it scrambled for liquidity to see it through a $1bn monthly cash burn.

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