Moody's rates New World Gaming loans Ba3, Caa1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to New World Gaming Partners, Ltd., a Ba3 (LGD3, 31%) rating to the company's C$25 million six-year first-lien revolver, C$575 million seven-year first-lien term loan and C$115 million seven-year first-lien delayed-draw term loan and a Caa1 (LGD5, 85%) rating to its C$400 million 71/2-year second-lien term loan.

The outlook is stable.

Proceeds from the new bank facilities will be used to partially fund the $1.3 billion acquisition of casino assets owned by Gateway Casino Income Fund, Gateway Casinos, Inc. and Star of Fortune Gaming Management (B.C.) Corp. by New World Gaming, which is a newly created 50/50 joint venture between Publishing and Broadcasting Ltd. and Macquarie Bank Ltd.

The agency said the ratings take into account New World Gaming's significant debt burden - the total debt-to-EBITDA ratio is expected to remain well over 7x during the next two years - and the fact that despite owning eight operating casinos and one casino development, about 40% of the company's property-level pro forma cash flow will come from only one casino, the Burnaby casino in Vancouver.

Positive ratings consideration is given to the company's strong market position in the British Columbia market, Moody's added. On a combined basis, New World Gaming and Great Canadian Gaming will have about 80% market share in British Columbia based on number of slots and tables.

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