I know. Brunswick is not a gaming company and doesn’t own hard assets so its borrowing rate could be higher than casino operators. However, BC is free cash flow positive and maintains a ton of cash and low leverage, unlike virtually every gaming operator. The obvious exception, of course, is PENN which remains our favorite stock.
ASCA is of particular interest in that this company negotiated one of the most attractive credit facilities, which is contributing to the lowest cost capital structure in the gaming industry (see the chart). The problem is the credit facility matures in 2010 (the earliest among the operators) and right now comprises almost all of the company’s debt structure. You can bet ASCA will be looking for liquidity at the next open credit window. My guess is long term fixed rate debt to offset its overreliance on variable rate debt. In my “GAMERS OVEREARNING: REFIS TO KNOCK EPS DOWN, ASCA AND MGM AT RISK” post on 8/10/08 I noted that ASCA’s EPS could be cut in half with a credit facility refinancing 3-4% higher. Obviously, to the extent the company opts for the safety and liquidity of long-term fixed rate debt, the EPS impact may be greater.