Station Casinos' corporate family rating affirmed at '(P)B2' - Moody's |
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Tue, 23 Oct 2007 07:14
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MUMBAI (Thomson Financial) - Moody's Investors Service said it has affirmed Station Casinos Inc's corporate family rating at '(P)B2' on the casino operator's revised post LBO (leveraged buyout) capital structure.The revised capital structure will include a higher level of senior secured debt that will rank ahead of the company's existing notes, Moody's said.Moody's said it expects to downgrade Station's existing senior unsecured notes to 'B2' from 'Ba2', and existing senior subordinated notes to 'Caa1' from 'Ba3' when the LBO transaction closes. Station's existing ratings will remain on review for downgrade until the transaction closes, the ratings firm said.Moody's said the corporate family rating reflects Station's high pro-forma leverage and low interest coverage, reliance on earnings growth to improve credit metrics and limited free cash flow available for debt repayment.The rating also considers concentration risk in the Las Vegas local market, that is showing signs of slowing revenue growth, the existence of off-balance sheet leveraged development joint ventures, and eventual growth in capital spending for new on-balance sheet gaming developments that are likely to keep leverage within the range of a single B rating.The rating reflects the large equity contribution -- up to 2.688 bln usd -- by affiliates of Colony Capital LLC, adequate liquidity and Station's successful development and operational track record in the stable Nevada regulatory environment.Moody's also affirmed Station's 650 mln usd revolving credit facility at '(P)Ba2' and assigned the same rating to the company's new 250 mln usd six year bank term loan.Moody's said the rating of the proposed senior secured 250 mln usd bank term loan and 650 mln usd revolver takes into account the significant level of unsecured and subordinated debt in the capital structure that will be junior to the bank revolver.The rating outlook is stable, reflecting Moody's expectation that Station's EBITDA will increase in 2008 due to positive returns from recent capital projects and modest same store earnings growth.TFN.newsdesk@thomson.comypv/manCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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