Debt ratings lowered for casino operator

Tuesday, June 29, 1999 | 11:14 a.m.

The debt rating agency Standard & Poor's lowered two of its ratings for Boyd Gaming Corp. following Boyd's announcement Monday that it's buying an Indiana riverboat casino for $274 million in cash.

S&P cut Boyd's corporate credit rating from BB-plus to BB and its senior unsecured debt rating from BB to BB-minus. However, the subordinated debt rating was increased from BB-minus to BB-plus.

Standard & Poors said Boyd's investments all over the country "will cause recent deleveraging initiatives and credit improvement to cease over the next few years."

Besides buying the Indiana casino, Boyd is investing in its Sam's Town and Stardust properties in Las Vegas and is building a resort in Atlantic City.

With some $740 million in debt already, Boyd plans to spend $150 million in Atlantic City, $80 million at Sam's town and $25 million at the Stardust, S&P said.

"Also, Standard & Poor's is increasingly concerned about the potential renewal prospects for the company's Indian management contract in Philadelphia, Miss."

S&P said this contract, expiring in 2001, will account for about 15 percent of Boyd's pro forma cash flow including the new Indiana casino. It contributed $39 million in cash flow last year.

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