S&P drops Georgica

Standard & Poor's said it lowered its long-term corporate credit rating on Georgica plc to CCC+ from B- and placed the rating on CreditWatch with negative implications, reflecting its concerns about the company's increased leverage and the forthcoming smoking bans in England and Wales.

At the same time, S&P said it lowered its debt rating on Georgica's £60 million senior secured second-lien floating-rate notes due 2012 to CCC from CCC+ and also placed this rating on CreditWatch with negative implications.

The rating actions reflect the company's increased leverage during 2006, in excess of targets set for the previous rating level, the agency said, noting that they also reflect its concerns regarding the impact of the forthcoming English and Welsh smoking bans on Georgica's cue sports subsidiary Rileys, in the context of the group's already very aggressive financial policy and tightly-drawn banking covenants.

Additional uncertainties have arisen following Georgica's announcement on Nov. 29 that it proposes to separate the group into two separately-listed companies next year, with the Tenpin bowling business in one company and the cue sports business and freehold property assets in the other, S&P said.

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