While MotorCity Casino was controlled and managed by Mandalay Resort Group its corporate credit rating was “B+.” A year after Marian Ilitch (CCM Merger, Inc.) took over complete ownership and management of MotorCity Casino, analysts at Standard & Poor’s dropped the credit rating to “B” and at times assigned a negative outlook.
Analysts had originally been told to anticipate some consistent upswing in revenues and a corresponding decrease in debt ratios with the larger gaming floor and the hotel addition; but instead, MotorCity Casino has failed to produce a greater revenue stream and its debt ratios are questionable.
In September, Standard & Poor’s assigned a negative outlook to MotorCity Casino (CCM Merger, Inc.). And then earlier this month, Standard & Poor’s again dropped MotorCity Casino’s credit rating to a "B-" and assigned a negative ratings outlook. Among other concerns, Standard & Poor’s has discovered declining cash flow at MotorCity Casino.
Standard & Poor’s defines these ratings as having significant speculative risk but suggests an entity with a “B” rating generally has the capacity to meet its financial commitments. But with a "B-" rating and a negative outlook assigned, Standard & Poor’s suggests any further adverse business, financial or economic conditions will likely impair MotorCity Casino’s capacity or willingness to meet its financial commitment.
According to the Securities & Exchange Commission (SEC), of those entities Standard & Poor’s assigns a “B” rating, 35.76% experience default; and of those with a rating of “CCC,” the next ratings step down from “B” ratings, 54.38% experience default.
In acquiring MotorCity Casino and completing its expansion and remodel, Marian Ilitch (CCM Merger, Inc.) has reportedly amassed approximately $1 billion of debt.