Media

Playboy’s debt rating stripped

In May, Playboy Enterprises was riding high after refinancing its $185 million debt and promising a flurry of new licensing deals to boost its bottom line.

But now some of those deals are apparently taking longer to negotiate, crimping cash flow and prompting Standard & Poor’s to reverse course and downgrade its corporate-debt rating.

“We believe the company is at risk of violating its leverage and interest coverage covenants in the third and fourth quarter of 2013, potentially jeopardizing its access to its revolving credit facility,” S&P said in dropping the rating to CCC+ from B-. It also cut the ratings on the company’s senior secured debt to B- from B.

Scott Flanders, CEO of Playboy, reached after a night at the Playboy Club in London, insisted, “We did have some delays in securing some licensing deals, but we will not breach our covenants in 2013. We have $16 million in cash on our balance sheet.”

Flanders said the company “will not come within $1 million of breaching our covenants.”