Moody's may cut Ameristar

Moody's Investors Service said it placed Ameristar Casinos, Inc.'s Ba3 corporate family and probability of default ratings on review for possible downgrade, along with the B2 (LGD 5, 84%) rating on its $650 million 9¼% senior unsecured notes due 2014.

The review follows news that the company has entered into a binding agreement with the co-executors of the estate of Craig H. Neilsen to purchase 26.15 million shares of Ameristar common stock held by the Neilsen estate at a price of $17.50 per share, for a total price of $457.63 million, Moody's said.

The review considers the material increase in leverage that is expected to occur given the debt financed nature of the share repurchase, Moody's said.

Ameristar plans to obtain about $2.1 billion in new debt financing, the proceeds of which will be used to retire about $1.5 billion of existing indebtedness and to fund the share repurchase, the agency said.

Pro forma for the share repurchase, the debt-to-EBITDA ratio will be about 6.5x compared to about 5x reported at the end of December.

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