Moody’s upgrades Tropicana owner

Monday, May 21, 2001 | 11 a.m.

Moody's Investors Services upgraded the credit rating of Aztar Corp., citing the company's strengthening operating results and debt reduction efforts.

Moody's raised the rating on $235 million in senior subordinated notes from B2 to Ba3, and the rating on the company's $276 million senior secured revolving credit facility and $50 million term loan from Ba3 to Ba2. Aztar's senior implied rating was hiked to Ba3, and its senior unsecured issuer rating to Ba3. The outlook is stable.

"The upgrade reflects Aztar's demonstrated ability to simultaneously improve operating results and reduce leverage," the Moody's report stated. "Since 1999, improved operating results, a lower absolute level of debt and the refinancing of high (interest) senior subordinated debt resulted in significantly improved leverage and (debt) coverage measures."

The new rating also reflects Moody's belief that significant amounts of new debt won't be layered above the existing senior notes.

Moody's said it took into account Aztar's plans to add a 500-room hotel tower and a retail and entertainment complex to its Atlantic City Tropicana at a cost of $225 million. Moody's said it expected the project to be "financed in a relatively conservative manner," and should take advantage of a lack of hotel rooms and non-gaming amenities in Atlantic City.

Aztar is based in Phoenix. In addition to the Tropicanas in Las Vegas and Atlantic City, the company operates casinos in Laughlin, Missouri and Indiana.