|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
Sept. 11, 2012--Las Vegas locals gaming operator Station Casinos LLC received a thumbs-up Monday from Wall Street analysts for its latest financing deal.
Station is arranging $775 million in financing to replace existing debt.
In looking at the proposed deal, Moody's Investors Service affirmed Station's "B3" Corporate Family and Probability of Default ratings and changed the firm's rating outlook to positive from stable.
That means Moody's may consider raising the company's debt rating in the future.
"The outlook revision to positive reflects Moody's expectation that Station's operating margins (profit margin) will increase further, and that the company will apply a substantial portion of its free cash flow towards further debt reduction. Station has reduced its consolidated debt by about $270 million (approximately 12 percent of the company's total consolidated debt) since emerging from bankruptcy in June 2011," Moody's said in a report on the financing deal.
Moody's also assigned a "B2" rating to the proposed new $775 million credit and loan facility.
Standard & Poor's similarly assigned a preliminary "B plus" rating to the planned $775 million in financing.
S&P also affirmed its "B" corporate credit rating on the company and said the rating outlook is stable.
S&P noted Station is reducing debt by $150 million thanks to it being reimbursed $194 million it had advanced to tribal casino partner the Graton Tribe in California.
Because of the lower debt totals, S&P on Monday boosted recovery ratings or actual ratings on various classes of Station debt. Recovery ratings predict how much noteholders would recover in a default.
The B-level corporate credit ratings are in the rating agencies' speculative range, which is common for the gaming industry.
Last month, Station reported a second-quarter profit of $7.5 million and said net revenue was up 4.5 percent from last year's second quarter to $312.2 million.
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