Riviera Holdings Corp. downgraded by Moody’s

Moody’s Investors Service downgraded Riviera Holdings Corp.’s (RIV) credit ratings today, two days after the company revealed it received a notice of technical default from its lender.

The downgrade finishes a rough week for the company that included a default notice from its lender and a 36 percent drop in its stock value.

The ratings were pushed to Caa2, or "in poor standing," from B3, or "highly speculative." They were also put on review for a further possible downgrade.

The review stems from Riviera Holdings’ announcement Wednesday it had received the default notice from Wachovia Bank on $245 million in bank loans after the company refused to enter a deal under terms set by the bank.

The deal would have given the bank access to all of the cash from the company’s operations should Riviera Holdings issue a notice of default to the bank.

For the downgrade, Moody’s cited various key factors including Riviera Holding’s exposure on the Strip, and the possible increased leverage of the company due to declining revenues.

The Riviera on the Strip generates 75 percent of the company’s revenues. Company revenues declined 23 percent in the third quarter, the most recent numbers reported.

"The company currently has no access to its revolver," Moody’s bond analyst Peggy Holloway wrote in a note to investors. "(Riviera Holdings) has a relatively small cash balance as its only form
of liquidity."

The company’s shares closed the week at $1.62 per share Friday, a drop of 92 cents since early Monday, on the American Stock Exchange.

The stock hit as low as $1.50 before climbing back the last 45 minutes of trading

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