S&P affirms bond ratings in wake of Missouri deal

Monday, July 24, 2000 | 10:57 a.m.

Standard & Poor's affirmed its credit ratings on Station Casinos Inc. Friday, one day after the company announced the sale of its Missouri holdings and the purchase of the Fiesta hotel-casino in North Las Vegas.

S&P repeated its "BB" corporate credit rating, "BB+" bank loan rating and "B+" subordinated debt rating. S&P's outlook remains positive.

Station will pay $185 million for the Fiesta and sell its casinos in Kansas City and St. Louis to a group of its executives for $475 million.

The pending acquisitions of the Fiesta and the Santa Fe hotel-casino in northwest Las Vegas will provide Station "with a portfolio of six high-quality off-Strip properties that are expected to generate increasing cash flow given the favorable demographics of the greater Las Vegas region," S&P said in its report.

"The sale of the two Missouri properties reduces the geographic diversity of Station's cash flow base but provides the company with the flexibility to accomplish its strategic objectives in Las Vegas, while maintaining its balance sheet strength," S&P said. "If the company maintains a moderate financial policy and continues to improve credit protection measures, the ratings could be raised over the intermediate term."

Meanwhile, Station's bondholders reacted positively to Thursday's news. Station's 10.125 percent notes rose 0.5 points to 102.75 in Thursday trading, while its 8.875 percent notes rose 0.5 points to 97.25.