NEW YORK Oct. 20, 2008–Standard & Poor’s Ratings Services today placed its ratings, including its ‘B-‘ corporate credit rating, on Las Vegas-based Station Casinos Inc. on CreditWatch with negative implications.
“The CreditWatch listing reflects our concerns around the company’s progress toward amending its bank covenants,” explained Standard & Poor’s credit analyst Ben Bubeck.
On Sept. 17, 2008, following our review of the terms of a proposed amendment to Station’s bank facility, we lowered our rating one notch and cited concern that, despite the proposed loosening of the covenants included in the amendment, the company could face a covenant violation potentially as soon as March 31, 2009.
The conclusion of our review incorporated the assumption that Station would execute the amendment in the near term. However, the company has yet to announce execution of the amendment. In the absence of an amendment, we project that the company will violate its total leverage covenant on Dec. 31, 2008. In addition, more recent turmoil in the financial markets and continued weakening of economy are likely pressuring performance in the Las Vegas locals market more than previously contemplated.
In resolving the CreditWatch listing, we will continue to monitor the company’s progress toward executing an amendment to its bank facility, and will reassess our conclusion in the event that the terms of the proposed amendment have changed since our previous review on Sept. 17, 2008. We will also revisit our assumptions around expectations for Station’s performance as part of the review.