Moody’s: Affinity Gaming second-lien loan Caa1

Moody's Investors Service said it assigned a Caa1 rating to Affinity Gaming Corp.’s proposed $100 million second-lien term loan due 2025.

Proceeds, along with proceeds from a $125 million incremental add-on to Affinity's existing B1-rated $319 million first-lien term loan due July 2023, $20 million of balance sheet cash and $30 million of future cash from operations, will be used to refinance Affinity's existing $145 million second-lien term loan due 2024 in full and make a $121 million cash distribution to its shareholders, subject to receiving gaming regulatory approval.

Affinity plans to make the scheduled distribution in the first quarter of 2018, if approved by gaming regulators. In addition to the requisite gaming regulatory approval, the ability to make this distribution is subject to the company obtaining covenant changes to its credit agreement.

"Although the proposed refinancing had no impact on Affinity's B2 corporate family rating or stable rating outlook, it does weaken the company's position within its rating category," Moody’s senior vice president Keith Foley said in a news release.

"The Caa1 rating assigned to Affinity's proposed $100 million second-lien term loan, which is two notches below the company's corporate family rating, considers the significant amount of debt ahead of it in the company's pro forma capital structure.”

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