S&P rates Downtown notes B-

Standard & Poor's said it assigned a B- rating to the proposed $140 million senior secured notes due 2013 to be co-issued by Downtown Resorts LLC and Downtown Capital Corp. and a B- corporate credit rating to Downtown Resorts.

The outlook is stable.

Proceeds, along with about $21 million of equity proceeds, will be used primarily to develop, construct and re-brand the existing Lady Luck Casino Hotel in downtown Las Vegas, to repay existing debt, to acquire the Third Street Promenade from an affiliate and to fund a $20 million interest reserve account.

S&P said the ratings reflect the challenges associated with the planned re-branding and repositioning of the hotel into a newer property, given its location in the mature downtown Las Vegas market. Also, the company's high pro forma debt leverage and small cash flow base increase the risks that a slower-than-expected ramp-up period could affect the company's liquidity position.

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