S&P rates WarHorse B-, loans B+, B-

S&P said it assigned a B- issuer rating to WarHorse Gaming LLC, B+ issue and 1 recovery ratings to its planned $20 million super-priority revolver and B- with 3 recovery ratings to its proposed $300 million term loan due 2028. The outlook is stable.

“The B- issuer credit rating on WarHorse reflects the risks associated with developing and ramping-up new gaming operations. These include the uncertainty over the breadth and depth of the target gaming market, the need to build a customer database from scratch, some construction risk, future economic uncertainty, and the need to service relatively high-interest construction loans,” S&P said in a press release.

The company intends to use the proceeds to finance the construction of an expansion project of its interim casino in Lincoln, Neb., a new casino in Omaha, fund an interest reserve, and for transaction expenses. The Lincoln project is expected to be completed by the end of 2024 and the Omaha casino in the third quarter of 2025.

“The stable outlook reflects our forecast for WarHorse to maintain sufficient liquidity through the approximately two-year construction period and that the properties will generate sufficient EBITDA in its first year of full operations to comfortably support fixed charges and generate positive discretionary cash flow (DCF) that it may use for debt reduction,” S&P said.

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