The Bottom Line™:

• Merlin Entertainments has not yet confirmed how it plans to deal with its Senior Notes due 2027 – a particularly critical refinancing given that the group’s senior secured debt has springing maturity tied to the Senior Notes.
• We consider the potential for a liability management transaction that sees the Senior Notes refinanced with new debt that primes the group’s existing senior secured bonds.
• There is ample capacity for structurally senior debt of non-guarantors and effectively senior debt secured on non-collateral assets, providing flexibility for an “off the shelf” liability management transaction.
• There is also the potential for a dropdown to an Unrestricted Subsidiary.
• Positively, a blocker would thwart a double dip using an Unrestricted Subsidiary structure, but there could be scope for a double dip using a non-guarantor Restricted Subsidiary.
• The Restricted Payments covenant under the SSNs could be implicated in connection with repayment of the Senior Notes, but a wide carveout could make this a non-issue