High-Yield Bond for Chuck E. Cheese Owner CEC Entertainment to Refi 2026 Debt Gets Lackluster Investor Reception; Pricing Expected to Come Wider 

A high-yield bond for Chuck E. Cheese parent company CEC Entertainment, which will refinance its 2026 debt, has struggled to draw investor interest because of concerns around consumer spending and amid new issuance stalling as investors seek clarity on President Donald Trump’s decision on tariffs, according to sources.

Price talk on CEC Entertainment’s $660 million five-year noncall two senior secured note was being offered in the mid-9% area, according to sources. Proceeds from the deal will be used to refinance its $650 million 6.75% notes, according to an S&P Global Ratings note. Commitments on the JPMorgan and Goldman Sachs-led deal were due March 28, according to sources, yet final pricing on the bond has not come in as order books are still not filled.

Market participants looking at the bond for CEC Entertainment noted there has been a lackluster reception to the deal because of its cyclical business and investors not being favorable on consumer discretionary deals as of late.

One investor noted as an example Mohegan Gaming struggling in the primary recently with a deal that came with wider pricing and document changes after investor pushback, Octus, formerly Reorg, reported last week.

CEC Entertainment’s bond is paused for now, the investor said, but JPMorgan is still taking orders at wider levels with requests for more investor-friendly covenants. Additionally, CEC Entertainment’s past restructuring history has affected investors’ willingness to participate with current price talk. The investor noted that they believe the deal will get done with wider pricing, somewhere higher than a 10.5% yield.

Another investor noted that while CEC Entertainment tries to build a full order book, it faces an uphill battle with timing given the equity market’s volatility and the expected tariff decisions from Trump this week, which has paused new issuance in the primary markets.

Octus’ pro forma capital structure of CEC Entertainment can be seen below:
 

After CEC Entertainment’s proposed deal, the company’s capital structure would include a $100 million revolving credit facility and $660 million of senior secured notes.

Chuck E. Cheese disclosed second-quarter 2024 earnings to creditors in September, saying that adjusted EBITDA dropped 42.9% on a year-over-year basis to $22 million, Octus reported. Revenue for the privately held American entertainment restaurant chain decreased 4.4% to $201 million in the same comparison, while same-store sales increased 2% and leverage stood at 3.57x as of quarter-end, as reported.

In 2020, CEC Entertainment emerged from bankruptcy under the ownership of its lenders led by Monarch Alternative Capital holding about 17.5% of interest in the company, according to Octus’ analysis.

Moody’s Investors Service and S&P assigned a B3/B- rating to Chuck E Cheese’s $660 million senior secured notes, as the ratings agencies cited CEC’s growth capital investments, remodeling and brand awareness, as well as high debt levels and weak interest coverage. S&P said in its note that it simulates a default occurring for CEC Entertainment in 2027 due to “a steep decline in the company’s sales and EBITDA stemming from unfavorable industry conditions and a global recession.”

CEC Entertainment’s 6.75% senior secured notes due May 2026 were last trading today at 98.75 to yield 7.91%, according to MarketAxess.

Octus’ covenant analysis of CEC Entertainment’s bond can be found HERE.

JPMorgan, Goldman Sachs and Monarch did not respond to requests for comment.