S&P affirms credit ratings

Tuesday, May 25, 1999 | 1:07 a.m.

Standard & Poor's credit rating agency removed Park Place Entertainment Corp. debt from CreditWatch and affirmed its triple-B-minus and A-minus-three rating on the company's corporate credit.

But S&P's outlook remains negative for Las Vegas-based Park Place's debt.

S&P placed the company on CreditWatch in April, following Park Place's announcement that it would buy Starwood Hotels & Resorts Worldwide Inc.'s Caesars World gaming assets for $3 billion in cash.

The rating reflects the acquisition of a significant cash-flow driver, offset by increased leverage, said S&P.

S&P sees potential "integration challenges" for Park Place in merging the Caesar assets with its own, but notes that the company has successfully integrated the assets of its Bally and Grand acquisitions in recent years.

Caesars Las Vegas has underperformed over the past couple years, said S&P, and its "upside earnings potential" will be limited by increased competition on the Strip unless additional investments are made. The Caesars Indiana and Atlantic City properties will also face new competition in coming years, said S &P.

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