NEW YORK, Feb. 17, 2009–Standard & Poor’s Ratings Services today lowered its issue-level rating on Las Vegas, Nev.-based Station Casinos Inc.’s 7.75% senior notes to ‘D’ from ‘CC’. The rating action reflects the missed Feb. 15, 2009 interest payment on the notes. A payment default has not occurred relative to the legal provisions of the notes, since there is a 30-day grace period to make the payment. However, we consider a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial stress–unless we are confident that the payment will be made in full during the grace period.
This rating action follows our Feb. 4, 2009 research report in which we lowered our corporate credit rating on Station and our issue-level rating on Station’s 6.5% senior subordinated notes to ‘D’. The company announced on Feb. 3, 2009, that it did not make the Feb. 1, 2009 interest payment on the 6.5% senior subordinated notes. At that time, Station also announced a solicitation for votes from eligible institutional holders of its senior unsecured and senior subordinated notes for a restructuring plan under Chapter 11 of the U.S. Bankruptcy Code.
In addition to the missed payments on the 6.5% senior subordinated notes and the 7.75% senior notes, we expect Station to miss the upcoming interest payment on the 6.875% senior subordinated notes (due March 1). If and as this interest payment is not made, the issue-level rating on the notes will also be lowered to ‘D’.
All other issue-level ratings remain on CreditWatch, where they were placed with negative implications Nov. 26, 2008.