Moody's lowers Lucky Bucks

Moody's Investors Service said it downgraded Lucky Bucks, LLC's corporate family rating to Caa3 from Caa1, the probability of default rating to Caa3-PD from Caa1-PD, and its senior secured first-lien bank credit facility ratings to Caa3 from Caa1. The outlook is negative.

These actions conclude the review that started on Oct. 13, the agency said.

“The downgrade considers several factors, including the unfavorable impact on EBITDA from the increase in regulatory enforcement in the Georgia coin-operated amusement machine market, along with Moody's heightened concern regarding inflation and recession, particularly the potential impact on consumer discretionary spending. Combined, these factors have resulted in increased leverage levels and weak liquidity. Moody's believes the company is at risk of a covenant violation.

Lucky Buck's is required to meet a debt to pro forma adjusted EBITDA leverage covenant of 7.75x. The financial covenant is a springing covenant when the revolver is drawn at 35%. The stress on EBITDA has also caused overall liquidity stress, particularly given the company's relatively large mandatory term loan debt amortization requirement, at $27.75 million per year, and the fact that the company's credit facilities are not currently hedged, exposing the company to interest rate risk that accompanies inflation. Lucky Bucks does have equity cure rights,” Moody’s said in a statement.

The outlook reflects the company's elevated leverage, weak liquidity, and weaker-than-expected operating performance, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.