Fitch: Pinnacle Entertainment on watch

Fitch Ratings said it placed the debt ratings of Pinnacle Entertainment on Rating Watch negative due to the damage caused by Hurricane Katrina. The rating applies to the BB senior secured credit facility, the B issuer default rating and B- senior subordinated notes.

Fitch commented the rating most at risk is the B- senior subordinated rating.

The senior subordinated rating is based on Fitch's estimated recovery (R5) in the event of a default, the agency said.

Should Pinnacle generate significantly less cash flow and utilize more senior secured bank debt to fund its operations in the future, the recovery prospects for the senior subordinated notes would very likely be less than the current estimate, which would negatively affect the subordinated rating, Fitch added.

The existing ratings primarily reflect Pinnacle's diversifying cash flow base, solid liquidity profile and long-dated maturity schedule, the agency said.

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