Moody's rates Midwest Gaming loans Ba3, notes Caa1

Moody's Investors Service said it assigned B3 corporate family and probability-of-default ratings to Midwest Gaming Borrower, LLC, Ba3 (LGD2, 18%) ratings to its $10 million first-lien revolving credit facility due 2015 and $110 million first-lien delayed-draw term loan due 2015 and a Caa1 (LGD5, 74%) rating to its $175 million second-lien secured notes due 2017.

The outlook is stable.

Proceeds from the proposed debt offerings plus a $150 million cash equity contribution by Midwest's owners and $10 million of vendor equipment financing will be used to build a $445 million casino project in Des Plaines, Ill.

The agency said the B3 corporate family rating considers the start-up nature of Midwest's casino project, single-property concentration risk and relatively small size based on expected net revenues as well as the significant amount of existing competition in Midwest's primary market area.

Positive rating consideration is given to the densely populated nature of Midwest's primary market, the significant cash equity component of the capital structure and the transaction's credit enhancements, including interest and contingency reserves as well as other structural protections, Moody's said.

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