S&P ups Scientific Games, rates loan BB, notes B+

Standard & Poor's said it raised its ratings for Scientific Games Corp., including its corporate credit rating, to BB from BB-, and its subordinated debt rating to B+ from B, and removed them from CreditWatch, where they had been placed on Nov. 30.

At the same time, S&P assigned its BB rating and recovery rating of 2 to Scientific Games' proposed $300 million senior secured credit facility due 2009 and a B+ rating to the company's proposed $200 million senior subordinated notes due 2012.

The outlook is stable.

Proceeds from the proposed bank facility and note issue, in addition to the recently completed $250 million 0.75% convertible senior subordinated debentures due 2024, will be used to refinance the company's existing debt and to meet fees and expenses.

S&P said the ratings on Scientific Games reflect the competitive market conditions in the lottery and pari-mutuel industries, the mature nature and capital intensity of the online lottery industry, the cash flow concentration from the company's lottery segment, and the existence of a much larger and well-established competitor in the online lottery segment, Gtech Holdings Corp. Still, the company maintains a leadership position in the pari-mutuel gaming and instant-ticket lottery industries, long-term customer contracts, and a diversified customer base.

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