Concerns about debt and declining revenue prompted Moody's Investors Service on Friday to revise its outlook for Ameristar Casinos Inc. to "Negative."
The ratings company previously had a "Stable" outlook on the Las Vegas-based operator of eight casinos.
Moody's said Friday that a $45 million cost savings program and aggressive management efforts failed to prevent revenue from falling in the fourth quarter and the trend likely will continue through 2009.
Ameristar reported Tuesday that revenue for the quarter ended Dec. 31 dipped 3 percent to $293.6 million from $302.8 million, weighed down by lower casino revenue as consumers continue to pull back spending during the recession.
That weak consumer trend could make it difficult for Ameristar to sustain debt levels needed to maintain current rating, said Keith Foley, Moody's senior vice president, in a statement.
Ameristar may have difficulty meeting debt requirements as early as the June 30 fiscal quarter, he said.
"Given the current disruption in capital markets, Ameristar could find it difficult and expensive to obtain any necessary covenant waivers or amendments on a timely basis and under favorable terms," the Moody's statement said.
The outlook, which affects $1.7 billion of debt, could be revised back to "Stable" if Ameristar resolves its covenant compliance concern. Moody's rates the company's corporate family rating a non-investment grade "Ba3," and its probability of default rating at "B1."
Ameristar shares fell 17 cents to close at $10.03.
Ameristar spokeswoman Rebecca Theim did not immediately return a call seeking comment.
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