Moody’s changes Isle of Capri to positive

Moody's Investors Service said it revised Isle of Capri Casinos, Inc.’s outlook to positive from stable and raise its speculative grade liquidity rating to SGL-1 from SGL-2.

The B1 corporate family rating, B1-PD probability of default rating, Ba1 bank loan rating, B1 senior unsecured debt rating, and B3 senior subordinated debt rating were affirmed.

Moody’s said the positive outlook considers its expectation that Isle of Capri will achieve further EBITDA growth as more of its revenue flows to the bottom line given the company's lower cost structure.

Also considered is that Isle of Capri has no major development-type capital expenditure plans, and as a result, will generate about $100 million annual free cash flow before development capital expenditures, a portion of which the agency expects will be applied toward the repayment of debt. As a result, Moody's increased confidence that Isle of Capri can achieve debt/EBITDA near 4 times by April 2017 – Isle of Capri has an April fiscal year-end date – as well as sustain that leverage over the longer-term.

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