Moody's raises Herbst ratings

Moody's Investors Service said it raised the ratings of Herbst Gaming Inc., including the senior implied rating to B1 from B2, the long-term issuer rating to B2 from B3, and the rating for the $217 million 10.75% senior secured notes due 2008 to B1 from B2.

Moody's said the upgrade is in recognition of the company's improved financial profile, demonstrated free cash flow generating ability, and continued favorable growth prospects.

At the same time, Moody's assigned a B3 rating to Herbst's proposed $150 million senior subordinated notes due 2012 and a B1 rating to the company's proposed $150 million senior secured credit facility due 2009.

The outlook is stable.

Proceeds from the proposed senior subordinated notes and senior secured credit facilities will be used to repay Herbst's $217 million 10.75% senior secured notes due 2008, pay a $10 million dividend to stockholders, and pay related fees and expenses. Herbst recently commenced a cash tender offer to purchase its 10.75% senior secured notes due 2008.

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