Moody's rates Isle of Capri notes B2

Moody's Investors Service said it assigned a B2 rating to Isle of Capri Casinos Inc.'s proposed $425 million senior subordinated notes due 2014 and confirmed the company's existing ratings.

Proceeds from the note offering will be used to refinance the company's $390 million 8.75% senior subordinated notes due 2009. Isle recently announced that it is commencing a tender offer to purchase and consent solicitation for any and all of these notes.

Ratings confirmed include the company's $250 million senior secured revolver due 2007 at Ba2; $246 million senior secured term loan facility due 2008 at Ba2; $390 million 8.75% senior subordinated notes due 2009 at B2; and $200 million 9% senior subordinated notes due 2012 at B2.

The outlook remains stable.

Moody's said the ratings consider Isle's geographic diversity, riverboat market focus and moderate leverage. Restricted group debt to EBITDA is about 4.0 times and is consistent with the Ba3 senior implied rating level.

The ratings also reflect Isle's demonstrated positive free cash flow generating ability, although over the next few years, Moody's expects the company to apply excess cash flow to domestic and international development opportunities as opposed to absolute debt reduction.

Moody's said key credit concerns include the company's exposure to the highly competitive Mississippi and Louisiana gaming markets, which, on a combined basis, account for more than half of the restricted group's property level operating cash flow.

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