Part ofIsle of Capri Black Hawk's new credit will be used to back the company's $84 million acquisition of Colorado Central Station and Colorado Grande Casino from International Game Technology. The transaction will allow the company to take advantage of increased market share and consequent expansion opportunities in the fast growing Black Hawk, Col., casino market, according to Moody's Investors Service. The lack of diversified assets that back the new facility, however, burdens the credit. "If you're a creditor, [the Black Hawk assets are] your only source of repayment," said Keith Foley, Moody's senior analyst.
The rating agency has assigned the $210 million credit a B1 rating. The market is doing well and it has a very good outlook, Foley said, adding that the acquisition also offers the company more gaming space as well as larger future revenue and EBITDA. But Foley explained that because the company is an unrestricted and non-recourse subsidiary of Isle of Capri Casinos, a creditor does not have access to the other assets owned by Isle of Capri.
The credit will be secured by a first priority perfected security interest in all the Isle of Capri Black Hawk assets and the capital stock and assets of acquired properties. In addition, it will also hold guarantees from all Isle of Capri Black Hawk wholly owned subsidiaries that exist or will be created.
The credit comprises a three-year, $68 million pro rata and a four-year, $142 million "B" term loan. About $105 million from the "B" piece will support the acquisition. The deal has also earned a stable outlook from Moody's, reflecting that the combined entity should be able to maintain a less than four times leverage ratio and meet its debt services and capital spending requirements.
|Other Newly Rated Deals*|
|Burns Philp's||$1.775 billion||B1||Moody's|
|Central Parking||$350 million||Ba2||Moody's|
|* Thurs, Jan. 23 through Wed, Jan. 29|