Company Issues Bonds to Finance Renovation - Saturday 12th of March 2005

The owner of the Hotel San Remo in Las Vegas has issued $125 million in senior secured bonds to finance the renovation and transformation of the property into the Hooters Casino Hotel.

The Moody's Investors Service ratings agency has assigned a B3 rating to the notes, which will be issued by Hooters Las Vegas. Moody's also assigned a B3 senior implied rating, Caa2 long-term issuer rating and SGL-3 speculative grade liquidity rating. The company has a stable ratings outlook.

The ratings are considered below investment grade and take into account the fact that the company is dependent on a small, single casino "that needs to achieve a significant improvement in operating cash flow to meet future debt service requirements" and that the new owners "have limited casino operating experience." A number of factors including the rights to the Hooters brand name and the growth potential in Las Vegas offset that, Moody's said.

The property announced a management agreement with the owners of the Orlando, Fla.-based Hooters restaurant chain in August. The renovation and re-branding effort, which has not yet begun, is expected to cost about $64 million and be complete by February 2006, the ratings agency said.

That's later than the 2005 grand opening that was revealed in August.

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