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Moody’s ups Eldorado Resorts; rates debt
Moody's Investors Service said it upgraded Eldorado Resorts, Inc.'s corporate family rating to B1, probability of default rating to B1-PD, $375 million senior unsecured notes to B3 and speculative grade liquidity rating to SGL-1.
At the same time, the agency assigned to Eagle II Acquisition Co. LLC, a wholly owned subsidiary of Eldorado, a Ba3 to both the proposed seven-year $1.45 billion senior secured term loan and $300 million revolver, and a B3 to the proposed $375 million eight-year senior unsecured notes.
The outlook is stable. This concludes the review that began on Sept. 19.
Moody’s said the upgrade of Eldorado’s corporate family rating to B1 reflects the material increase in scale in terms of revenues and the number of properties owned and improved geographic diversification as a result of the Isle acquisition.
Pro-forma for the acquisition, Eldorado’s largest geographic concentration will be in Missouri at 18% of property EBITDA. This diversification mitigates earnings volatility from supply additions and regional economic fluctuations.
The upgrade also reflects the reasonable pro-forma leverage on a debt/EBITDA basis which Moody's estimates at about 5.7 times (including $35 times of cost synergies) for the 12-month period ended Dec. 31, as well as the ability of the combined entities to generate free cash flow.
"Given the material increase in scale, the combined entities should be able to achieve near and medium term synergies as they leverage marketing capabilities and corporate efficiencies which will improve profitability and cash flow generation," Moody's senior vice president Peggy Holloway said in a news release.
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