S&P hacks Lucky Bucks ratings

S&P said it downgraded its ratings on Lucky Bucks LLC and its senior secured debt to CCC from B. The 3 recovery rating on the debt is unchanged.

“The downgrade to CCC reflects a significant slowdown in performance at Lucky Bucks' locations as a result of heightened regulatory enforcement and deteriorating economic conditions, and minimal liquidity, which could cause a potential covenant breach or payment default if operating performance deteriorates further,” the agency said in a press release.

S&P noted a tougher regulatory environment in Georgia. “The combination of overall market softness and increased enforcement resulted in second-quarter net revenue declines of about 8% and an adjusted EBITDA decrease of about 12% year over year, stemming from both a lower machine count and lower win per unit per day (WPUPD). The WPUPD as of the 12 months ended June 30, 2022, was $174, slightly below pre-pandemic levels and compared with a high of $186 in 2020 because of stimulus funds.”

S&P said it forecasts Lucky Bucks’ adjusted debt to EBITDA to be above 7x over the next 12 months, over the threshold for the rating.

The outlook is negative.

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