Moody's downgrades Rank

Moody's Investors Service said it downgraded The Rank Group plc's corporate family and senior unsecured issuer ratings to Ba3 from Ba2 and the $100 million guaranteed notes due 2008 and $14.3 million guaranteed notes due 2018 issued by subsidiary Rank Group Finance plc to Ba3 from Ba2.

The outlook is negative.

The agency said the downgrade reflects the weakening of the company's credit profile following the sale of its Hard Rock operations, which will be completed in early March. Proceeds from the sale will be largely returned to shareholders, thus weakening credit metrics, and the disposal further reduces the scale, scope and diversification of the group's operations.

The new Ba3 ratings also reflect concerns about the outlook for the company's U.K. bingo business, which has to contend not only with an underlying trend of declining attendance, but also with the negative effects of a smoking ban that has been introduced in Scotland and by July 2007 will cover all of the United Kingdom, the agency said.

On the other hand, Moody's acknowledged the benefits of the strategic focus Rank has gained now that its operations are concentrated in U.K. gaming. Additionally, Rank has made good progress in exiting from the Deluxe Media businesses as planned with a complete exit envisioned by mid-2007 and overall cash costs expected to remain within the £57 million provision established in 2005.

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