S&P puts Churchill Downs on watch

S&P said it placed all its Churchill Downs Inc. ratings, including the BB issuer rating, on CreditWatch with negative implications.

The placement follows Churchill Downs reporting it plans to buy Peninsula Pacific Entertainment LLC (P2E) for $2.485 billion, including the assumption and subsequent repayment of $850 million of P2E's debt. Churchill Downs plans to fund the transaction with new debt and cash on hand, including proceeds from the pending sale of land near Calder Casino, S&P said. The deal is expected to close by Dec. 31.

“The CreditWatch placement of our ratings on Churchill Downs reflects the likely leveraging effect of the P2E acquisition, which we believe could increase leverage above our 4x downgrade threshold for the BB issuer credit rating,” the agency said in a press release.

S&P said it will consider the effect that the acquisition, capital spending and development plans will have on Churchill Downs’ pro forma leverage.

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