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Moody's may lower Majestic
Moody's Investors Service said it placed the ratings of Majestic Star Casino, LLC and Majestic HoldCo, LLC on review for possible downgrade.
This is in response to continued concerns that Majestic Star's operating results, liquidity profile and overall capital structure remain vulnerable to significant investment by its competitors, promotional activity, a smoking ban that went into effect in Colorado at the beginning of 2008 and an overall slowing of the U.S. economy, the agency said.
Debt/EBITDA remains above 8.0 times and EBITDA coverage of cash interest is only about 1.2 times, the agency noted.
Affected ratings include Majestic Star's $300 million senior secured notes due 2010 at B2 and $200 million senior secured notes due 2011 at Caa1 and Majestic HoldCo's corporate family rating at B3, probability of default rating at B3 and $55 million 12% discount notes due 2011 at Caa2.
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