Station Casinos Credit Rating Cut
August 1, 2008
Today S&P announced that it was cutting Station Casinos credit rating from B+ to B- and placing the company on S&P’s CreditWatch list. Station Casinos is owned by the Fertitta brothers who also own Zuffa, parent company of the UFC. The rating cut reflects S&P’s view that negative trends in the locals gaming market and gaming industry generally will continue into 2009.
The CreditWatch listing addresses S&P’s concerns about the Station Casinos liquidity. According to the report:
[S&P] expect[s] that in the absence of an amendment, the company may violate its bank covenants in the next few quarters, restricting access to its revolving credit facility. The company is currently seeking an amendment from its bank group, which will address this concern. If the amendment is successfully approved under terms that provide adequate cushion, we would affirm the rating at the current level, but with a negative outlook, speaking to ongoing weakness in the operating environment. If Station is unable to gain approval for its proposed amendment, we would consider lowering the rating further.
The report could help explain persistent rumors that Zuffa was for sale that circulated earlier this year.
