S&P rates Montreign loan B-

S&P said it assigned a B- corporate credit rating to Montreign Operating Co. LLC.

The agency also said it assigned a B- rating and 3 recovery rating to Montreign’s proposed $400 million first-lien term loan facility due 2022.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The outlook is stable.

The proceeds will be combined with about $308 million in equity contributions from parent company Empire Resorts Inc., $75 million second-lien pay-in-kind term loan due 2023 and $70 million vendor financing facility to fund construction of the Montreign Resort Casino, establish an interest reserve to fund debt service through the construction period and the first six months after the casino opens and fund fees and expenses, S&P said.

The ratings reflect the vulnerability of new gaming projects to uncertain demand and the difficulties the company could face in managing initial costs, the agency said.

These factors could lead to poor profitability during the first several months of operations and difficulties ramping up cash flow quickly enough to satisfy fixed charges, S&P said.

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