Moody's cuts Scientific Games outlook to negative

Moody's cuts Scientific Games rating outlook to 'negative' on plans to issue $125 mln debt

• On 4:38 pm EDT, Thursday October 29, 2009

NEW YORK (AP) -- Moody's Investors Service lowered the credit rating outlook of Scientific Games Corp. on Thursday after a subsidiary said it would raise $125 million by issuing debt.

Moody's cut the gaming equipment maker's outlook to "negative" from "stable," affecting about $1.5 billion of debt. The outlook tells holders of Scientific's debt what direction the company's credit rating is headed.

Scientific Games International plans to issue senior subordinated notes due 2019, which will be guaranteed by the parent company and wholly owned U.S. subsidiaries. It does not include Scientific Games International.

Moody's said increased debt and lower-than-expected earnings thus far in 2009 could make it tough for Scientific Games to boost its creditworthiness fast enough to keep its current rating.

Scientific Games said the borrowed funds will be used toward an upfront payment for an Italian instant ticket lottery concession, if Scientific Games' group bid wins the Italian government contract.

Scientific Games owns 20 percent of Consorzio Lotterie Nazionali, the only operator of the Italian Grata e Vinci instant lottery until the deal with the government ends in 2010.

The Italian government will announce the winner of the new multi-year concessions by mid-November. Getting the contract requires a large upfront payment to the goverment.

Shares of Scientific Games finished Thursday up 62 cents, or 4.8 percent, at $13.60.

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