Moody's affirms Scientific Games

Moody's Investors Service said it affirmed Scientific Games Corp.'s Ba2 corporate family rating, Ba2 senior debt rating and Ba1 subordinated debt rating following recent the announcement that the company will acquire the online lottery assets of EssNet AB for $60 million. The company has also signed a non-binding letter of intent to acquire The Global Draw Ltd. and related companies for about $183 million, plus an earn-out that will be paid depending on future financial performance. Both transactions will likely be financed with borrowings under the company's revolving credit facility and new debt.

The outlook is stable.

The ratings reflect reasonable purchase prices and Moody's expectation that both acquisitions will be accretive to earnings and will be financed in a manner that maintains sufficient revolving credit availability to support operations.

As of Sept. 30, the company had about $219 million of availability under its $250 million revolver and $66 million of cash.

The ratings anticipated acquisitions and temporary increases in leverage. Moody's predicted that the company's pro-forma debt to trailing 12-month EBITDA could rise to 3.5x, but will likely improve to around 3x through earnings growth in 2006.

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