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S&P lowers Scientific Games, rates loans BB-
Standard & Poor's said it lowered the corporate credit rating on Scientific Games Corp. to BB- from BB and removed the rating from CreditWatch, where it was placed with negative implications in January.
The outlook is negative.
S&P also said it assigned a BB- rating to its proposed $2.6 billion senior secured credit facility with a preliminary recovery rating of 3, indicating 50% to 70% expected default recovery.
The proceeds will be used to finance the company's $1.5 billion acquisition of WMS Industries Inc., refinancing existing debt and pay related fees and expenses.
The agency also said it lowered the rating on the company's existing secured credit facilities to BB+ from BBB-. The recovery rating on these loans remains 1. The agency also said it removed these ratings from CreditWatch negative.
S&P also said it lowered the rating on the company's existing senior subordinated debt to B+ from BB-.
The rating remains on CreditWatch with negative implications.
Upon closing of the new secured credit facilities, the agency said it expects to revise the recovery rating on the subordinated debt to 6, which indicates 0 to 10% recovery, from 5, indicating 10% to 30% recovery.
The agency also said it expects to lower the rating to B from B+.
The downgrades consider that following the acquisition, Scientific Games' leverage will remain at more than 5x through 2015, S&P said.
This is above the maximum threshold for the previously assigned financial risk score of aggressive, the agency said, and in line with the new assessment of financial risk considered highly leveraged.
The company also faces a high degree of integration risk, S&P said.
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