Company in line for credit upgrade

Friday, April 13, 2001 | 10:43 a.m.

Moody's Investors Service on Thursday placed Aztar Corp. on review for a possible rating upgrade. About $560 million in debt could be affected.

Phoenix-based Aztar is the owner and operator of the Tropicana on the Las Vegas Strip.

Moody's said it may upgrade Aztar's B2 rating on $235 million in senior subordinated notes, and the Ba2 rating on the company's $276 million revolving credit facility and $50 million term loan. Aztar's Ba3 senior implied rating and B1 issuer ratings could also be upgraded. All of these ratings are considered "junk bond" status.

Moody's said the possible upgrade was prompted by "operating improvements and gradual de-leveraging that has taken place over the last several years." It said an upgrade will depend on Aztar's ability to keep debt levels at or below three times annual cash flow while it launches a $225 million expansion of the Tropicana Atlantic City. The projected returns from this project will also be examined, as well Aztar's ability "to further increase market share and cash flow outside of Atlantic City."

Higher credit ratings typically make it easier for companies to issue additional debt and can result in lower interest rates.