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Moody's rates Speedway SGL-2
Moody's Investors Service said it confirmed Speedway Motorsports, Inc.'s Ba1 corporate family and probability-of-default ratings, concluding the review for downgrade that began on May 23.
The agency also assigned a SGL-2 speculative grade liquidity rating and confirmed the senior secured bank credit facility at Baa3 (LGD2, 27%) and senior subordinated regular debenture at Ba2 (LGD5, 82%).
The outlook is stable.
Moody's said the confirmation reflects its belief that the acquisitions of Kentucky Speedway, LLC and New Hampshire Motor Speedway increase the size and long-term cash flow generation potential of the track portfolio.
The confirmation also considers the greater earnings potential, which the agency said sufficiently mitigates the near-term increase in leverage due to the incremental debt used to help fund the acquisitions.
Moody's said the Ba1 corporate rating reflects as strong market position in the motor sports industry with high operating margins and relatively stable revenue. Debt-to-EBITDA leverage is estimated at 2.9 times for the 12 months ended June 30.
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