Moody's cuts 155 East Tropicana

Moody's Investors Service said it downgraded 155 East Tropicana LLC's corporate family and probability-of-default ratings as well as the rating on its $130 million 8¾% senior secured notes due 2012 to Caa3 (LGD4, 57%) from Caa1. The SGL-4 speculative grade liquidity rating was affirmed.

The outlook is negative.

Moody's said the action is based on the increased risk of default through a potential distressed exchange offer or a missed debt service payment in the next 12 months, should the pending acquisition by Hedwigs Las Vegas Top Tier LLC fail and the company's EBITDA weaken further.

Given prolonged turbulence in the credit markets, the agency said it is skeptical about the deal in its current terms, which began on April 30, 2007, and that it is concerned about 155 East Tropicana's ability to meet its future debt service obligations.

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