NEW YORK— Moodys Investors Service has assigned a series of ratings to Wynn Resorts Las Vegas, LLC, and given it a ratings outlook of Stable. Ratings include: $340 million second mortgage notes due 2010 – B3 (co-issued by Wynn Las Vegas Capital Corp.); $750 million revolving credit facility due 2008 – B2; $250 million delayed draw term loan due 2009 – B2; Senior implied rating – B2; Long-term senior unsecured issuer rating – Caa1; Moody’s has given Wynn a “Stable” ratings outlook. The ratings are subject to the successful completion of a $450 million initial public offering, and also are subject to receipt and review of final terms and documentation. Approximately $375 million of the IPO proceeds combined with a $1 billion secured bank credit facility, $340 million second mortgage notes and a $188.5 million FF&E financing will be used to construct the Le Reve project on the north end of the Las Vegas Strip. Approximately $40 million of the IPO proceeds will be used to develop a casino resort in Macau through an unrestricted subsidiary. Issuance of the second mortgage notes and bank credit facilities are contingent upon a successful IPO. The ratings consider the construction, development and ramp-up risks associated with the $2.4 billion casino project that will take approximately 30 months to complete. While there are certain protections in place to mitigate potential problems associated with construction and development, a portion of the project will not be subject to a guaranteed maximum price construction contract, and only about 80% of the drawings will be complete by the time the proposed IPO is expected to close. Additionally, bank and FF&E borrowings can only be accessed after all equity and second mortgage note proceeds are exhausted and certain conditions are met. As a result, failure to meet these conditions could significantly impact the companys ability to complete the project. Protections in place designed to mitigate potential problems include a $50 million completion reserve, a $30 million liquidity reserve, about $80 million of contingency reserves, and capitalized interest through construction. Other risks include Le Reves single asset profile, significant reliance on destination travel and high-end gaming, and ability to achieve the projected return on investment. According to the agency, while many of the Las Vegas mega-resorts generate a significant level of annual cash flow, many of those same projects have not achieved the returns originally anticipated. Positive ratings consideration is given to the significant equity component of the project and Steve Wynns reputation as a developer of casino resort properties. Le Reve will feature 2,700 rooms, a 111,000-square-foot casino with 2,000 slot machines and 136 table games, an 18-hole golf course, a water-based entertainment complex, a Ferrari and Masserati dealership and an art gallery featuring works from Wynns collection.
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