Standard & Poor's has downgraded the credit rating of the Rivers Casino for the second time since late September, citing the "weak operating performance" of the North Shore slots venue.

In a report issued Nov. 24, the agency dropped the credit rating of Rivers affiliate Holdings Gaming Borrower two notches, from B minus to CCC amid concerns that the casino may not have the money to meet its debt obligations, including the $7.5 million a year it committed to help pay for the new arena.

The downgrade follows another report issued Sept. 28 that dropped the rating from B to B minus. Like the first, the latest downgrade is largely the result of what Standard & Poor's called the casino's "weaker-than-expected opening and ramp-up period."

Since its August 9 opening, the slots venue has struggled to meet expectations. Standard and Poor's had projected the casino to generate $300 a day per slot machine. But in its Nov. 24 report, the agency said the average win per machine had fallen from a peak of $250 to about $180 by the week ending Nov. 15.

Unless there's a "significant improvement in operating performance from that observed to date" the casino might not be able to generate enough cash to meet fixed charges, which include the arena payment, in excess of $55 million next year, S & P stated.

It said it expected a $56 million interest reserve account set up as part of the casino's financing to be depleted in the first quarter of 2010, putting more pressure on the facility to boost revenue.

Without a "substantial improvement in visitation trends and gaming revenue, a restructuring of the company's debt obligations is likely," the report added.

In a response, the casino said the downgrade "was entirely anticipated" by its ownership group "and does not impact the company or its financials in any way.

"We are seeing lowered ratings across the gaming industry as a result of the economy. What's important is that just five months into operations, Rivers Casino is posting market share gains and is becoming a destination of choice for gaming in Western Pennsylvania."

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