Moody’s rates AC Ocean Walk facilities

Moody's Investors Service said it today assigned a B3 corporate family rating and B3-PD probability of default rating to AC Ocean Walk, LLC.

The agency also assigned a B2 rating to the proposed $175 million five-year first-lien term loan, a Caa2 rating to the proposed $75 million 5.5-year second-lien PIK term loan, and Ba3 to the proposed $5 million four-year first-lien super priority revolver.

Moody’s said the B3 corporate family rating is constrained by execution risk associated with re-opening a large Atlantic City casino hotel resort that previously filed for bankruptcy, earnings concentration in a single property, concerns about Atlantic City's ability to grow and absorb new supply and high leverage upon opening.

“Another casino property is expected to reopen around the same time as AC Ocean Walk, (collectively, a 35% increase in slot and table positions). This large supply increase will result in above average promotional and marketing spend and slow the time it takes the property to ramp-up operations and attain its fair share,” the agency said in a news release.

“Between 2014 and 2016, five Atlantic City casinos closed as gaming in Pennsylvania and the economic downturn took its toll on the market.”

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