Claridge First Mtg Nts Rating Raised to 'CCC' by S&P Claridge Hotel & Casino Corp.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/3/98-- Standard & Poor's today raised its rating on Claridge Hotel & Casino casino or cassino (both: kəsē`nō). 1 Card game played with a full deck by two to four players. Its origins are obscure though it probably traces back to the Italian game of Scopa. Corp.'s $85 million first mortgage note issue to triple-'C' from double-'C'. The corporate credit rating also was raised to triple-'C' from double-'C'. The rating outlook is now stable. The rating reflects the company's thin credit protection measures and difficult competitive position of the Claridge. Although adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was down during the second quarter, the property is currently generating enough cash flow to cover interest expense. It has recovered from last year's financial stress, and withstood with·stand v. with·stood , with·stand·ing, with·stands v.tr. 1. To oppose with force or resolution. 2. To be successful in resisting. See Synonyms at oppose. v.intr. the impact of the Bally's Wild West opening and the Caesar's expansion. Still, the margin for error remains slim, as cash flow coverage of interest expense is just above 1.0 times (x). At these levels, little cash flow is available for capital expenditures at the property. The introduction of additional slot machines at Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). racetracks could disrupt operating performance over the near term, while the entrance of Mirage, Boyd, and potentially others in several years pose longer term threats. During the second quarter ending June 30, 1998, adjusted earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA) was $3.6 million, down from $4.3 million during the same period last year. OUTLOOK: STABLE The Claridge faces challenges, both near term and longer term, that make it unlikely that operating performance will improve materially. Based on current operating trends, the property is generating sufficient cash flow to cover debt service; however, with such a narrow financial cushion Cushion In the context of project financing, the extra amount of net cash flow remaining after expected debt service. cushion See call protection. , the outlook could change to negative if market conditions prevent cash flow from stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. . ---CreditWire
CONTACT: Greg Zappin, CFA, New York, 212/208-8615
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