MTGA gets B-minus on refinancing

Standard & Poor's, the credit-rating agency, has assigned preliminary ratings to elements of the Mohegan Tribal Gaming Authority's refinancing plan.

In a statement issued Monday, the agency said it assigned a preliminary "B-minus" rating to the authority's planned $475 million bank facility, which includes a $200 million revolving line of credit and a $275 million term loan, both due March 31, 2015.

The agency assigned a preliminary "CCC-plus" rating to the authority's planned offer of $225 million in new, first-lien debt. The authority, which announced its refinancing plan a week ago, plans to use some of the proceeds of the offering to reduce its outstanding bank credit facility from $675 million to $475 million.

MTGA has offered to exchange nearly $1.1 billion worth of outstanding bonds for notes with later maturity dates and, in most cases, higher interest rates.

Standard & Poor's had reacted to MTGA's announcement last week by lowering its issuer credit rating on the authority to "CC." It indicated that if the planned debt exchange succeeds, it likely will raise the rating to "B-minus."

Under Standard & Poor's ratings, debtors rated "BB" face exposure to adverse business, financial, or economic conditions. Ratings in the "CCC" range, which is lower than "BB," reflects greater vulnerability to economic conditions.

Moody's, another credit-rater, took a similar view of the MTGA refinancing plan, announcing last week that it will consider the exchange offer "a limited default" upon closing.

The authority, which operates Mohegan Sun in Uncasville and Mohegan Sun at Pocono Downs, a racetrack casino in Wilkes-Barre, Pa., will discuss its quarterly financial results today in a conference call with investors and gaming-industry analysts.

In a press release issued last week, the authority announced that it expected net income, or profit, for the quarter that ended Dec. 31 to range between $23.5 million and $24.5 million, an increase of between 82 and 89 percent over the same quarter the previous year.