Moody’s boosts Station Casinos debt rating to ‘positive’

Moody's Investors Service on Monday upgraded its ratings on Station Casinos LLC, as the Las Vegas-based gaming company is attempting to arrange $775 million in financing to replace existing company debt.

In a report, Moody's affirmed Station's "B3" corporate family and probability of default ratings and upgraded the company's rating outlook to positive from stable. The rating agency also said it would consider raising the company's debt level in the future.

"The outlook revision to positive reflects Moody's expectation that Station's operating margin will increase further, and that the company will apply a substantial portion of its free cash flow towards further debt reduction," the report said.

Moody's noted that Station has reduced its consolidated debt by about $270 million, or about 12 percent of the company's total consolidated debt, since emerging from bankruptcy in June 2011.

Moody's cautioned that Station outlook could be revised back to stable "if monthly gaming revenues in the Las Vegas locals market begin to trend down," or if local economic conditions show signs of renewed stress.

Station in August reported second-quarter earnings of $7.5 million, as net revenues rose 4.5 percent from the second quarter of 2011 to $312.2 million.

Moody's said its positive rating consideration was "given to Station's relaxed debt maturity profile - there are no material long-term debt maturities until 2016 - limited capital expenditure plans and good interest coverage."

Contact reporter Chris Sieroty at 702-477-3893 or csieroty@reviewjournal.com.