Moody's rates American Casino & Entertainment loans B1, Caa2

Moody's Investors Service said it assigned B1 (LGD 2, 28%) ratings to American Casino & Entertainment Properties LLC's proposed $215 million guaranteed senior secured first-lien term loan due 2020 and $15 million guaranteed first-lien senior secured revolver due 2018 and a Caa2 (LGD5, 79%) rating to the company's proposed $120 million guaranteed senior secured second-lien term loan due 2021.

In addition, Moody's changed the outlook to developing from negative and lowered the speculative grade liquidity rating to SGL-4 from SGL-3. The company's corporate family rating is B3, the probability of default rating is B3-PD, and the senior secured notes are rated B3.

Proceeds from the proposed $335 million of term loans and cash on hand will be used to refinance the company's $338 million of outstanding 11% senior secured notes due June 15, 2014.

The agency said the change in outlook reflects its view that the ratings could be affirmed with a stable outlook if the company successfully completes the refinancing as proposed. However, an inability to execute the transaction as outlined could result in a downgrade.

The downgrade of the speculative grade liquidity rating reflects the near-term maturity of the company's 11% notes and its inability to fully fund this maturity from internal sources of liquidity, Moody's said. A successful completion of the proposed refinancing would result in upgrade of the rating back to SGL-3.

Moody's said the B3 corporate family rating reflects the company's small size and high leverage.

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