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03 Feb 2011
New York, February 03, 2011 -- Moody's Investors Service today placed CCM Merger, Inc.'s
(CCM) Caa2 Corporate Family and Probability of Default ratings on review
for possible upgrade. At the same time, Moody's assigned
a B3 rating to the company's proposed $20 million 5-year
senior secured revolver and $615 million 6-year senior secured
term loan. CCM's Caa3 $273 million senior unsecured
notes due 2013 were affirmed. The ratings on the company's
existing bank facilities of Caa1 were also affirmed and will be withdrawn
once the transaction closes and the facilities terminated.
Proceeds from the proposed $635 million bank facilities will be
used to refinance CCM's existing $70 million revolver that
expires in July 2011 and $539 million term loan B that is due in
July 2012. The proposed transaction is expected to close by the
end of February.
"The review for possible upgrade considers Moody's view that
the proposed refinancing will provide CCM with a more relaxed debt maturity
schedule and a meaningful amount of covenant relief," stated
Keith Foley, a Senior Vice President at Moody's. "This
will result in a one-notch improvement in CCM's Corporate
Family Rating to Caa1 once the proposed transaction closes."
The review for possible upgrade also reflects Moody's more favorable
view of the company's revenue, earnings, and free cash
flow prospects and the increased likelihood that CCM can achieve and sustain
debt/EBITDA at or near 6.5 times, the targeted leverage required
for a higher rating. Debt/EBITDA for the fiscal year ended December
31, 2010 was about 7.3 times.
The affirmation of CCM's $273 million senior unsecured notes
due August 2013 at Caa3 reflects the fact that even at a Caa1 Corporate
Family Rating, the amount the amount of senior debt ahead of the
notes will remain substantial.
Ratings placed on review for possible upgrade:
Corporate Family Rating at Caa2
Probability of Default Rating at Caa2
$20 million 5-year senior secured revolver at B3 (LGD 3,
$615 million 6-year senior secured term loan at B3 (LGD
$273 million senior unsecured notes due August 2013 at Caa3 (LGD
Ratings affirmed and to be withdrawn once the proposed transaction closes:
$70 million senior secured revolver expiring July 2011 at Caa1
(LGD 3, 33%)
$539 million senior secured term loan B due July 2012 at Caa1 (LGD
The principal methodologies used in this rating were Global Gaming published
in December 2009, and Loss Given Default for Speculative-Grade
Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
CCM Merger, Inc. indirectly owns and operates the MotorCity
Casino in Detroit, Michigan. The company generates approximately
$460 million of annual net revenue.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's places CCM Merger CFR on review for upgrade; assigns B3 to new bank facilities
250 Greenwich Street
New York, NY 10007
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