S&P rates Green Valley Ranch facility B+

Standard & Poor's said it assigned its B+ rating to Green Valley Ranch Gaming LLC's proposed $250 million senior secured bank facility and to the company's corporate credit and senior secured debt. The outlook is stable.

Proceeds from the bank facility will be used to help fund the recently announced expansion of the Green Valley Ranch Station property, to refinance existing debt, and for fees and expenses. Pro forma total debt outstanding, once the proposed facility closes, is expected to be around $155 million.

S&P said the ratings for Las Vegas, Nev.-based Green Valley Ranch reflect the company's reliance on a single source of cash flow, its short operating history, and the expected increase in capital spending and debt leverage during the next few quarters associated with the planned expansion project.

These factors are offset, the agency said, by the steadily improving performance of Green Valley Ranch Station, its good location, the good market demographics, limited additional future competition, and credit support in the form of a make-well agreement from the joint venture partners, including Station Casinos Inc. (BB/stable/--).

In addition, S&P said construction risks associated with the proposed expansion are mitigated by the existence of a completion guarantee by the partners.

Pro forma for the new bank facility, EBITDAM coverage of interest expense is around 8x and total debt to EBITDAM around 3x. However, with debt expected to increase during the next several quarters to fund the planned expansion, total debt to EBITDAM and EBITDAM coverage of interest expense are likely to be in the 4x and 7x area, respectively, for 2004.

Still, these credit statistics are in-line with the rating, S&P said.

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