S&P rates Vegas operator’s debt

Monday, March 29, 2004 | 11:23 a.m.

Las Vegas-based Boyd Gaming Corp. on Friday announced plans to sell $300 million of debt in a private placement, money the company plans to use to pay off existing debt and to fund a portion of its pending $190 million purchase of Harrah's Shreveport in Louisiana.

In its filing the company also noted its intent to finance its pending $1.3 billion merger with Coast Casinos Inc., as well as to refinance the debt acquired in that merger by replacing its current bank credit facility with a bigger bank loan. The new package includes a $1 billion, 5-year revolving credit line and a $500 million, 7-year term loan.

The company also plans to offer an additional $200 million in senior subordinated debt.

Boyd announced in the filing that, as of Thursday, it had received commitments for the full amount of the $1 billion in revolving bank debt, subject to final documentation.

Boyd also used the filing to announce that the Illinois Gaming Board this month renewed the company's Par-A-Dice riverboat casino license for a four-year term.

Boyd's Securities and Exchange Commission filing was followed by Standard & Poor's Ratings Services, which assigned its B+ rating to Boyd's proposed offering.

The $300 million senior subordinated notes to be offered would be due in 2014.

At S&P, B+ is a non-investment grade rating (junk-bond status), indicating that the debt is vulnerable to adverse business, financial and economic conditions though the company currently has the capacity to meet financial commitments. S&P rates all Boyd credit and debt a non-investment grade.

At the same time, S&P affirmed its "BB" corporate credit and "B+" subordinated debt ratings on Boyd.

But S&P said the "BB+" senior secured and "BB-" senior unsecured debt ratings remain on CreditWatch with negative implications, "given that all the details of Boyd's capital structure, pro forma for the acquisition of Coast Casinos Inc., are not yet available."

"Therefore, the impact on notching cannot be determined. The outlook is stable. Pro forma for its pending acquisitions of the Harrah's Shreveport property and Coast Casinos, Boyd is expected to have approximately $2.3 billion in debt outstanding," S&P said.

"The acquisition of Coast Casinos significantly improves Boyd's overall business position by combining its existing diversified assets with a portfolio of gaming properties that have a good competitive position in the Las Vegas locals market," the rating agency said.