Moody's Investors Service has shifted its outlook to positive on Cannery Casino Resorts LLC of Las Vegas thanks to a new financing deal and expectations that Cannery will continue to be profitable on a cash flow basis.
Cannery has two hotel-casinos in Southern Nevada and a casino at the Meadows racetrack in Washington County, Pa. In the second quarter its loss narrowed to $138,000 from $2.77 million a year earlier despite flat business conditions in Las Vegas, where it no longer manages the Rampart Casino at the JW Marriott resort in Summerlin.
Moody's on Aug. 2 had revised Cannery's debt rating outlook to negative from stable because of risks associated with the refinancing of upcoming debt maturities.
On Wednesday, Moody's placed Cannery's key Corporate Family and Probability of Default ratings on review for upgrade after Cannery disclosed it plans to refinance all of its $470 million in existing debt with proceeds from the company's proposed $565 million in bank credit facilities.
''The completion of the transaction as proposed is expected to result in a one-notch upgrade of Cannery's Corporate Family and Probability of Default ratings to B3 from Caa1," Moody's said in a report Wednesday.
The debt refinancing deal will improve Cannery's financial flexibility by moving significant debt maturities from 2013 to 2017, Moody's said.
In the meantime, Moody's expects Cannery will generate positive annual free cash flow of $15 to $20 million on annual net revenue of about $510 million.