S&P rates new American Casino notes B

Standard & Poor's said it assigned its B rating to the proposed $200 million senior secured notes due 2012 to be issued jointly by American Casino & Entertainment Properties LLC and its wholly owned subsidiary American Casino & Entertainment Properties Finance Corp.

At the same time, a B corporate credit rating was assigned to the company.

The outlook is positive.

The proceeds from the above transaction will be used to finance the acquisition of two Las Vegas-based casinos, repay intercompany debt of one of the contributed entities, to fund distributions to the company's direct parent, and to pay related fees and expenses.

S&P said the ratings on American Casino & Entertainment reflect the entity's portfolio of second-tier assets, reliance on a single market, the disadvantaged northern Strip location of its largest cash flow generating entity (The Stratosphere Casino, Hotel and Tower), the fact that one of the properties has been unprofitable for the past few years, and a relatively small cash flow base.

These factors are tempered by a healthy "locals" market in Las Vegas, a stable regulatory environment in Nevada, good credit measures for the rating, and expected adequate liquidity upon closing of the transaction.

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