Fitch rates Stars, facility, notes

Fitch Ratings said it assigned Stars Group Inc. an issuer default rating of B+ with a stable outlook, a senior secured credit facility rating of BB/RR2 and a senior unsecured note rating of B-/RR6.

Fitch said the B+ issuer default rating reflects the company’s dominant position in online poker; increasing diversification through a successful launch of an online casino platform and acquisition of sport betting assets; and a history of using its superior FCF margins to deleverage quickly following its last large acquisition.

Stars’ 2019 debt/EBITDA estimated by Fitch is 6 times improving to 5.1 times by 2020 as the company realizes the cost synergies from the Sky Bet and Gaming acquisition and repays debt.

Fitch said it estimates Stars will generate $410 million-$590 million annual FCF during the 2019-2021 time period (15%-19% FCF margin) and assumes that the bulk of the FCF is applied to debt paydown.

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