Moody's may downgrade Speedway

Moody's Investors Service said it placed Speedway Motorsports, Inc.'s Ba1 corporate family and probability-of-default ratings, Baa3 (LGD2, 28%) senior secured bank credit facility and Ba2 (LGD5, 82%) senior subordinated bonds on review for possible downgrade.

The review follows the company's announcement that it entered into an agreement to acquire Kentucky Speedway, LLC for $78.3 million, including debt assumed or satisfied and $7.5 million of contingent payments. The company's CEO also indicated that Speedway Motorsports might expand Kentucky Speedway's 68,000-person seating capacity by up to 50,000 seats.

The proposed acquisition is occurring shortly after Speedway Motorsports completed its largely debt-financed $340 million purchase of New Hampshire International Speedway in January. Moody's indicated at the time that the acquisition would "significantly reduce" the company's flexibility within the Ba1 level over the intermediate term for additional track acquisitions or development projects.

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