Moody's rates MTR Gaming notes B3

Moody's Investors Service said it assigned a B3 rating to MTR Gaming Group, Inc.'s new $125 million senior subordinated notes due 2012.

Concurrently, Moody's affirmed MTR's B1 corporate family rating and B2 senior unsecured note rating and revised the outlook to stable from developing.

Proceeds from the new senior subordinated notes, along with cash from operations, FF&E financing, and revolver borrowings will be used primarily to complete the construction of Presque Isle Downs, to pay a $50 million license fee related to the project and to repay $41 million of revolver borrowings currently outstanding.

The B1 corporate family rating considers MTR's limited diversification, the potential negative impact to Mountaineer Park from the opening of slot parlors in Pennsylvania, and the expectation that leverage will reach 6.0 times during the construction of Presque Isle Downs, the agency said.

The outlook revision to stable from developing takes into account the formal rejection in January by a special committee of the board of directors of MTR of a management-led buyout proposal to acquire all of the shares of MTR for $9.50 per share in cash. Since that time, no other formal bids have been announced. The outlook also considers MTR's good operating history and liquidity profile, the favorable risk reward profile of the Presque Isle Down project, and West Virginia's stable regulatory environment.

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