MotorCity Casino Violates Loan Covenants, Downgraded
By Bill Rochelle
CCM Merger Inc., the indirect owner of the MotorCity Casino in Detroit, received a second downgrade inside six weeks from Moody’s Investors Service on Jan. 16 following the announcement it needs an amendment to a loan covenant for the Dec. 31 quarter.
The busted covenant resulted from gaming revenue that declined 11 percent in December.
Moody’s conjectured that CCM may need for cash to be invested by the owner before it lands a covenant amendment.
The $300 million in senior unsecured notes went down to Caa3. Both ratings were down one level.
Net revenue for 12 months ended in December was $480 million, Moody’s said.
A competing casino in Detroit, Greektown Holdings LLC, has been in Chapter 11 reorganization since May. Greektown is owned by a tribe of the Chippewa Indians.
Ratings Action: Moody's downgrades CCM Merger to Caa1 from B3; negative outlook