S&P lowers Herbst Gaming

Standard & Poor's said it lowered its ratings on Herbst Gaming Inc., including the corporate credit rating to CCC from B, and placed the ratings on CreditWatch with developing implications.

The downgrade and CreditWatch placement follow the recent announcement by the company that it has engaged an investment bank as a financial adviser to review financial strategic alternatives, potentially including a recapitalization, refinancing, restructuring or reorganization of its obligations or a sale of some or all of its businesses.

The agency said this announcement follows a meaningful decline in cash flow generation at Herbst's route operations segment, largely due to a recently imposed Nevada smoking ban, as well as continued weak operating performance at the company's riverboat and land-based casinos. Herbst also recently negotiated an amendment to its credit agreement.

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