S&P cuts 155 East Tropicana outlook to negative

Standard & Poor's said it revised the outlook on 155 East Tropicana LLC to negative from stable and affirmed the company's B- corporate credit and senior secured debt ratings.

The outlook revision follows the company's announcement of second-quarter operating results, the first full quarter of its newly re-branded Hooters Casino Hotel, in which earnings continue to be well below expectations mainly due to ongoing operating inefficiencies, the agency said. As a result, credit measures are very weak for the rating.

In addition, while near-term liquidity seems adequate, given revolver availability and excess cash balances, S&P said a significant improvement in operating performance is needed over the next few quarters to bolster the company' liquidity position and cover fixed charges.

The ratings reflect the company's narrow business position as an operator of a single casino, its disadvantaged off-Strip location, the highly competitive market environment, weaker-than-expected initial operating performance and tightening liquidity situation, the agency said.

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