Moody's confirms Pinnacle

Moody's Investors Service said it confirmed Pinnacle Entertainment, Inc.'s B2 corporate family rating, B1 secured bank facility rating and Caa1 senior subordinated note rating following an announcement by Aztar Corp. that it has entered into a merger agreement with Wimar Tahoe Corp., the gaming affiliate of Columbia Sussex Corp., and as a result, has terminated its merger agreement with Pinnacle.

The confirmation of Pinnacle's B2 corporate family rating considers the risks associated with the company's leverage and significant upcoming development activity related to two casino projects in St. Louis as well as expansions at Belterra, L'Auberge du Lac, and New Orleans. In total, these projects will cost about $900 million.

As a result, Pinnacle is expected to incur a significant cash flow deficit over the next few years, Moody's said.

The rating also continues to take into account the uncertainty regarding the amount and timing of any insurance coverage related to Hurricane Katrina.

The positive outlook anticipates continued improvement in Pinnacle's overall operating results, and acknowledges the company's improved liquidity profile, Moody's said.

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