Moody's rates Great Canadian Gaming loans Ba2, note B2

Moody's Investors Service said it assigned Ba3 corporate family and probability-of-default ratings to Great Canadian Gaming Corp., Ba2 ratings with loss-given-default assessments of LGD2 to the company's proposed C$200 million senior secured revolver due 2012 and C$200 million senior secured term loan B due 2014 and a B2 rating with a loss-given-default assessment of LGD5 to its $C200 million proposed senior subordinated notes due 2015.

The outlook is stable.

Proceeds from the proposed offerings will be used to repay Great Canadian Gaming's existing bridge facilities that expire later this year. Although the revolver will be un-drawn at closing, the company expects to use it along with cash from operations and proceeds from any new debt or equity offering to finance expansion, business development activity and for general corporate purposes. The agency said the proposed offerings are part of a recapitalization plan that began in August designed to obtain a more flexible debt structure that would more easily allow the funding of future development opportunities.

Moody's said the ratings consider the company's leading market position, eligibility for capital spending reimbursement programs in British Columbia and Nova Scotia and substantial barriers to entry.

The ratings also acknowledge that over 50% of Great Canadian Gaming's consolidated cash flow currently comes from two casinos and that the company's debt increased significantly to acquire and expand its properties over the past few years without a corresponding increase in profitability, the agency said.

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