Moody's: River Rock notes B3

Moody's Investors Service said it assigned a B3 (LGD 3, 46%) rating to River Rock Entertainment Authority's proposed $205 million seven-year senior notes, consisting of $110 million series A taxable notes and $95 million series B tax exempt notes.

All of its existing ratings, including its Caa2 corporate family and probability of default ratings, remain under review for possible downgrade.

The proceeds, along with other cash and a private placement, will be used to retire all of its outstanding 9¾% senior notes due 2011 and the existing notes of its owner, the Dry Creek Rancheria Band of Pomo Indians. The proceeds also were used to fund the construction of an emergency access road over the tribe's reservation and a portion of newly acquired property.

The ratings continue to reflect the high default probability and potential challenges the authority is likely to face in seeking to refinance within a very short timeframe its existing senior notes that mature on Nov. 1, 2011 while capital market remains precarious, Moody's said.

If the proposed refinancing is completed on time, the agency said it would likely upgrade the corporate family to B3, which is reflected in the notes' rating, the agency said.

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