Agency affirms Mandalay debt ratings

Tuesday, Oct. 19, 1999 | 11:47 a.m.

Duff & Phelps Credit Rating Co. said reaffirmed its ratings on about $1.1 billion of Mandalay Resorts Group debt based on improved cash flow.

Aside from a $150 million temporary casino in Detroit, Mandalay Resort Group executives have indicated they don't plan to add any new construction projects to their balance sheet, DCR said.

As a result, the company "is in a free-cash flow mode," DCR said. Mandalay Resort Group "'will generate nearly $500 million of discretionary cash flow during the next two and a half years that can be used for debt reduction and share repurchases."

"Credit protection measures should improve as cash-flow growth helps reduce debt-to-earnings before interest, taxes, depreciation and amortization to within the 4 to 4.5 times range next year," the rating agency said.

Mandalay Resort Group debt peaked at $2.7 billion following the opening of its Mandalay Bay hotel-casino earlier this year. DCR said the company "is particularly benefiting from the current strong environment in Las Vegas," where it derives two-thirds of its cash flow.

Mandalay Resort Group plans to finance a $600 million permanent casino in Detroit through non-recourse project financing, which won't boost the company's debt.