S&P rates MTR notes B-

Standard & Poor's said it assigned a B- rating to MTR Gaming Group Inc.'s $565 million 11½% senior secured notes, along with a recovery rating of 3, indicating 50% to 70% expected recovery in a default.

The proceeds, along with cash on hand, will be used to redeem its 9% senior subordinated notes due in 2012 and 12 5/8% senior secured notes due 2014, S&P said, and fund a portion of the development of a video lottery gaming facility at Scioto Downs in Ohio.

Concurrent with the closing of the notes, MTR also said it plans to enter into a new $20 million revolving credit facility due 2016, which will not be rated, the agency said.

The agency also said it affirmed its B- corporate credit rating.

The outlook was revised to negative from stable.

The revision reflects an expectation that increased competitive pressures from new competition in Ohio will result in the company's EBITDA coverage remaining weak for the rating over the intermediate term, S&P said.

MTR is highly dependent upon the successful ramp-up of Scioto Downs to offset expected declines at the company's existing facilities, S&P added.

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