S&P: Herbst unaffected

Standard & Poor's said the credit rating and outlook on Herbst Gaming Inc. (B+/stable/--) were not affected following the announcement that the company had agreed to buy substantially all the riverboat casino assets of Grace Entertainment Inc. (unrated entity).

The purchase price for the assets, located in St. Joseph, Mo., La Grange, Mo., and Osceola, Iowa, is about $287 million in cash. The transaction is expected to close in the next six to nine months, subject to regulatory approval.

S&P said it expects no meaningful change in Herbst's overall financial profile as a result of the planned acquisition. Based on the 12 months ended March 2004, pro forma debt to EBITDA increases to 6.3x (adjusted for operating leases) from 6.2x. Meanwhile, the acquisition will help to diversify Herbst's cash flow base by providing three assets in limited competitive markets.

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