Friday, Oct. 31, 2003 | 9:14 a.m.
Standard & Poor's has removed the bond ratings of slot maker Mikohn Gaming Corp. from "CreditWatch," where they were placed on Sept. 15, and said the company's outlook is stable. The rating agency also affirmed Mikohn's "B-" corporate credit and senior secured debt ratings.
S&P's CreditWatch is applied to bonds that could be raised or lowered depending on a company's actions.
The action follows the Las Vegas company's completion of a private placement of about $45 million in common stock and $12 million in warrants to acquire additional shares of stock, with proceeds expected to be used to reduce $40 million of debt. The company expects to reduce annual interest payments by about $4.8 million.
Standard & Poor's had indicated that the ratings would be affirmed with a "stable" outlook following the completion of the equity transaction. The agency said the company's total debt was about $62 million.
The "B-"rating reflects the company's "weak business position" with only about 5 percent of the market of leased slot machines in North America, a limited number of game themes and a small cash flow base, "constraining the company's ability to invest heavily in research and development," S&P analyst Peggy Hwan said.
"These factors are mitigated by Mikohn's niche position in certain segments and a lower interest burden," she said.
In a separate statement Wednesday, Mikohn President and Chief Executive Russ McMeekin said the company was pleased with the ratings action and said the company is "committed to improving our balance sheet, growing our business and enhancing shareholder value."
Mikohn Gaming has cut staff and divested non-core assets to focus on its core business of developing slot games.
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