Takeover Ups the Ante for Isle

Isle of Capri Casinos Inc. will acquire Flamingo Hilton Riverboat Casino's operations in Kansas City, Mo., the company announced last week. The acquisition is expected to cost Isle of Capri $33.5 million, not including an adjustment for assumed liabilities.

Although the move did not immediately affect bond levels, it did represent the company's ongoing credit enhancement.

While Isle of Capri said the new Kansas City assets would immediately add to earnings, company officials could not be reached for further comment regarding financing or cash flow.

This announcement comes just one week after Moody's Investors Service upgraded the company's $390 million, 8.75% senior subordinated issue from a B3 to a B2 (HYR 2/7/00). According to a Moody's report, the upgrade reflects "the company's enhanced geographic and property diversification, as well as its larger overall scale of operations pro forma for the acquisition of Lady Luck Gaming Corp."

Isle of Capri currently owns and operates seven riverboat, dockside and land-based casinos in six locations from Mississippi to Louisiana to Colorado. Once this and the acquisition of Lady Luck are complete, the company will grow to 12 operations in six states. Both acquisitions should be complete in six to nine months.

"Relative to the size of the company, Kansas City is a small acquisition once they combine with Lady Luck," said Moody's vice president and senior analyst Todd Gray.

The Riverboat Casino is a subsidiary of Hilton Hotel Corp.