S&P rates Twin River loan BB, notes B

S&P said it affirmed the BB- issuer credit rating on Twin River Worldwide Holdings Inc. despite a large leveraging shareholder distribution due to significant leverage capacity.

The agency also said it assigned a BB rating and 2 recovery rating to the proposed senior secured debt.

S&P also said it assigned a B rating and 6 recovery rating to the proposed senior unsecured notes.

Twin River Worldwide plans to issue a new senior secured credit facility consisting of a $250 million revolver and a $350 million senior secured term loan B, along with $350 million in senior unsecured notes to refinance its debt and to fund a distribution to shareholders, the agency explained.

The stable outlook reflects an expectation that Twin River's leverage will improve to the mid-3x range in 2020, from the high-3x range in 2019, providing some cushion to the 4x adjusted leverage downgrade threshold.

The ratings reflect an expectation that Twin River can absorb the leveraging impact of the planned return to shareholders and remain lower than 4x downgrade threshold.

Furthermore, the agency said it believes that the company's good free cash flow generation through 2020 will enable Twin River to voluntarily repay portions of its term loan to improve leverage.

With the company's development capital expenditure plans completed, S&P said it expects Twin River to generate free operating cash flow of $90 million to $95 million per year in 2019 and 2020.

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