Moody’s rates Graton Economic loans B2

Moody's Investors Service said it assigned a B2 rating to Graton Economic Development Authority's proposed senior secured bank debt, including a $100 million five-year revolver, $350 million five-year term loan A and $500 million six-year term loan B.

Graton's existing ratings, including its B2 corporate family rating, B2-PD probability of default rating and the B2 rating on its existing senior secured bank facility are unchanged. The existing bank facility ratings will be withdrawn when the transaction closes.

The outlook remains stable.

The proposed debt issuance, along with about $40 million of cash on hand, will be used to refinance Graton's existing $344 million senior secured term loan due 2018, $450 million 9 5/8% senior secured notes due 2019 and pay fees and expenses including early redemption premiums related to the notes.

Although the proposed refinancing will result in a modest increase in debt, Moody’s said the new credit agreement will nonetheless give Graton the ability to use its free cash flow to build an on-property hotel. Graton plans to begin construction on the 200-room hotel in the first half of 2015 and finish in mid-2016. The project – which is estimated to cost $175 million to $200 million – will also include 20,000 sq. ft. of banquet space, a large spa, pool and retail space. This project is expected to improve weekend business as well as mid-week business with the addition of the banquet space.

© 2015 Prospect News.
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