Moody’s rates Eldorado Resorts loan Ba3, notes Caa1

Moody's Investors Service said it assigned Eldorado Resorts, Inc. a B2 corporate family rating, B2-PD probability of default rating and a speculative grade liquidity rating of SGL-2.

At the same time, the agency assigned a Ba3 to the company’s proposed bank facility and a Caa1 rating to its proposed unsecured notes.

The outlook is stable.

Eldorado is proposing to raise a $575 million senior secured bank facility, consisting of a $150 million five-year revolver and a $425 million seven-year term loan, and $375 million in eight-year unsecured notes.

Proceeds from the proposed debt issuance will be used to refinance the existing debt of two of Eldorado’s subsidiaries: Eldorado Resorts, LLC's (B2 negative) $180 million senior secured 8 5/8 % notes due 2019 and MTR Gaming Group, Inc.'s (B3 negative) $561 million senior secured 11˝% second-lien notes due 2019. The proceeds – along with a planned $60 million equity issuance – will also be used to acquire the 50% portion of the Silver Legacy in Reno, NV that Eldorado does not currently own and the Circus Circus in Reno owned by MGM Resorts International (B2 stable).

Moody's said it views this transaction positively as it will significantly reduce Eldorado’s interest expense from about $77 million currently to under $50 million annually. It also extends the company’s debt maturity schedule such that its nearest debt maturity will be in 2020. Closing of the acquisition is expected by the end of 2015.

Following the close of the proposed transaction, all of the debt will be located at Eldorado. The ratings of Eldorado Resorts, LLC and MTR Gaming Group, Inc. will be withdrawn once the refinancing is closed.

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