Las Vegas Sun

February 13, 2012

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Moody’s downgrades Hooters

By Liz Benston

Friday, Dec. 12, 2008 | 6:04 p.m.

Sun coverage

Those orange short-shorts aren't cutting it in this downturn.

The Hooters Casino Hotel is on bankruptcy watch as much of the property's depressed cash flow goes toward interest payments on $136.9 million in debt.

Today, bond rating agency Moody's downgraded the casino owner's corporate family rating, probability of default rating and 8.75 percent senior secured note rating to Ca from Caa3.

The casino's owner, 155 East Tropicana, will likely default on the notes in the next 12 months – an event that could take the form of a refinancing attempt, a missed interest payment or a bankruptcy filing, Moody's Investors Service said.

The company may not be able to make bond interest obligations of about $11.4 million next year with only $6.9 million in cash and $5.1 million available from a revolving line of credit, Moody's said. The company spent $3.8 million on casino operations and marketing in the third quarter.

155 East Tropicana posted a 12 percent decline in revenue in the third quarter compared to the same period a year ago, which contributed to a widened net loss. The property lost 5.3 million in the third quarter compared with a loss of $3.6 million a year earlier.

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