Moody's rates Peermont note B3

Moody's Investors Service said it assigned provisional B3 corporate family and probability-of-default ratings to Peermont Global (Proprietary) Ltd. and a provisional B3 (LGD3, 49%) rating to its proposed 4.979 billion South African rand senior secured notes due 2014.

The outlook is stable.

The agency said the provisional B3 corporate family rating reflects the company's market position as the second-largest casino licensee in South Africa, with a 26% revenue market share in the province of Gauteng and strong historic growth; its very high leverage and weak credit metrics balanced against positive cash flow generation and the company's expectation for deleveraging; Peermont's scale, concentration in one property and the competitive landscape; and peer comparables.

In November, a consortium lead by management and the Mineworkers Investment Co. announced an offer to acquire the Peermont group for 12.90 rand per share in a transaction valued at 6.8 billion rand, including debt. Proceeds from the notes will be used to partially fund the leveraged buyout.

Based on pro forma credit metrics, the agency estimated that the total debt-to-EBITDA ratio will be about 7.3x, and Moody's said it does not expect substantive improvements in metrics and in the near term.

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