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S&P backs ratings for Pinnacle, Ameristar

NEW YORK (AP) -- Standard & Poor's Ratings Services on Tuesday backed its ratings, including its speculative grade "BB-" corporate credit ratings, for Pinnacle Entertainment Inc. and Ameristar Casinos Inc. and removed them from review for possible downgrade.

The rating outlook is stable.

Las Vegas-based Pinnacle is buying Ameristar for about $869 million in a deal that would more than double its size. Pinnacle owns seven U.S. casinos and a racetrack, and it has another casino under development. Ameristar has eight casinos in the U.S.

S&P said that although the extra debt stemming from the acquisition will weaken Pinnacle's credit profile, debt levels will improve in 2014 and 2015 when the company sells off its Lumiere Place casino and Ameristar's Lake Charles development and uses the proceeds to pay down debt.

The ratings service also noted that the elimination of the Lake Charles Development, which is partially completed, will also reduce the company's expenses and free up more cash to pay down debt.

Pinnacle shares fell 8 cents to $20.16 in afternoon trading.