Monday, March 16, 2009 | 8:31 a.m.
Las Vegas-based Ameristar Casinos Inc., which faces declining revenue because of the recession, said today that a key loan was amended so it could stay in compliance with debt covenants -- but with higher interest rates.
Ameristar, which reported having $1.67 billion of debt, said the amendments to its senior credit facility give it "significantly greater financial flexibility" and will help it avoid a debt/cash flow ratio violation later this year.
The company said the amendment increases Ameristar's senior leverage ratio limit. The ratio is defined as senior debt divided by cash flow for the trailing four fiscal quarters. The maximum permitted senior leverage ratio increases to 5.75:1 beginning in the current quarter ending March 31, followed by gradual step-downs.
Effective today, the interest rate add-on for all revolving loans and term loans under the credit facility will increase by 1.25 percentage points. To gain the amendment, Ameristar paid the facility's lenders $9 million in upfront fees.
"This amendment provides us with much greater flexibility to continue to successfully operate and grow our business in these uncertain economic times," Chief Executive Gordon Kanofsky said in a statement.
"We are grateful for the support of our senior lenders and believe it reflects the confidence they have in our company," he said.
For the fourth quarter of 2008, Ameristar lost $102,000 or $1.77 per share versus a profit in the 2007 quarter of $8.3 million or 14 cents per share. Revenue fell from $307 million to $297 million. The company's stock traded this morning at $12.05, down 25 cents
Ameristar's properties are: Ameristar Casino Resort Spa in St. Charles (St. Louis); Ameristar Casino Hotel Kansas City; Ameristar Casino Hotel Council Bluffs (Omaha, Neb.); Ameristar Casino Hotel Vicksburg (Mississippi), Ameristar Casino Hotel East Chicago (Indiana); Ameristar Casino Black Hawk (Colorado); and Cactus Pete's and The Horseshu in Jackpot, Nev. (on the Idaho border).