Standard & Poor's pushed Park Place Entertainment Corp. off the investment-grade cliff, downgrading the company's corporate credit rating from BBB- to BB+. S&P cites that the casino operator's plans for a $376 million expansion project at its Caesars Las Vegas property come at a time when credit measures have not improved to levels more consistent with the previous ratings. Park Place's EBITDA is lower than expected for the first six months of 2003, S&P explains, noting that multiples were expected to be much closer to four times by the end of this year, compared to 4.5 times at the end of last year. Park Place's debt as of last June was approximately $4.7 billion.
"Our company is committed to reducing debt. Since January 2002, we have paid down debt by $570 million. But at the same time, we have a commitment to our shareholders to grow our top line and we will continue to look for opportunities to do that," said a Park Place spokesman. "[The downgrade] reflects S&P's concerns with debt levels in the entire casino resort industry," he further noted.
* Winn Dixie Stores' corporate credit rating was downgraded from BB+ to BB by S&P. The downgrade was based on lower expectations for earnings and the potential for violation of bank covenants for the quarter ending this month, S&P says. "Based on the company's current projections of operating results for the first quarter of fiscal 2004, it will not be in compliance with certain bank covenants," S&P explains, adding that the Jacksonville, Fla.-based food and drug store, warehouse outlet, gas station and liquor store conglomerate is working with banks and expects to obtain an amendment before the quarter ends. S&P states that it believes this is achievable. Wachovia Securities and Merrill Lynch lead an existing credit for the company. Richard McCook, senior v.p. and cfo of Winn-Dixie, did not return calls.
|Other Ratings Actions*|
|Gray Television||Ba2||Upgraded from Ba3||Moody's|
|O'Sullivan Industries||Caa1||Downgraded from B2||Moody's|
|Titan Corp.||Ba3||On Review for Upgrade||Moody's|
|* Thurs, Sept. 11 through Wed, Sept. 17|