S&P: Scientific Games loan, notes BB-, unsecureds B

Standard & Poor’s said it affirmed the B+ corporate credit rating on Scientific Games Corp. and removed the ratings from CreditWatch, where they were placed with negative implications Aug. 1.

The outlook is stable.

S&P also said it raised the rating to BB- from B+ on the company’s senior secured debt, which is expected to include a $650 million revolver due 2018, about $2.3 billion in existing term loan debt due 2020, new $1.735 billion incremental term loan due seven years from closing and about $750 million in new senior secured notes.

The upgrade reflects the revision of the recovery rating on the secured debt to 2, indicating 70% to 90% expected default recovery, from 3.

The agency also said it assigned a BB- rating with a recovery rating of 2 to the new $1.735 billion incremental term loan due seven years after closing.

S&P also said it assigned a BB- rating with an expected recovery rating of 2 to the company’s $750 million senior secured notes due seven years after closing.

A 2 recovery rating indicates 70% to 90% expected default recovery.

The agency also said it assigned a B rating to the $2.2 billion and $500 million in senior unsecured notes tranches, due 2023 and 2025, respectively, that is believed to be issued later this year.

S&P also said it expects to assign a recovery rating on those notes of 5, reflecting 10% to 30% expected default recovery.

The proceeds from the proposed incremental term loan, the revolver and the expected senior secured and unsecured notes issuances to fund the $3.2 billion purchase price for Bally, to refinance about $1.8 billion in net debt at Bally and to pay for transaction fees and expenses, the agency said.

The agency also said it affirmed the B- rating on the company’s $250 million, $300 million and $350 million subordinated debt tranches. The recovery rating on those securities is 6, reflecting 0 to 10% expected default recovery.

S&P also said it affirmed all of the ratings on Bally Technologies Inc., including its B+ corporate credit rating, and removed the ratings from CreditWatch with negative implications, where they were placed Aug. 1.

The ratings on Bally will be withdrawn once the acquisition closes.

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