Moody’s has downgraded the credit rating of Century Casinos, Inc. (NASDAQ: CNTY) to Caa1, citing high leverage and increasing financial pressures. The company’s debt levels are expected to exceed 7.0x Debt/EBITDA in the next 12 to 18 months, raising concerns among investors about its long-term financial health. Century Casinos, a well-established operator with properties across Colorado, Missouri, West Virginia, Nevada, Maryland, and Alberta (Canada), has faced challenges in maintaining steady operational cash flow.
A significant factor contributing to its declining financial position is its lease obligations with VICI Properties L.P., which acquired the real estate assets of four Alberta-based casinos in September 2023 under a sale-leaseback agreement.
Century Casinos operates several gaming properties across North America and Europe. In the United States, it owns and manages Century Casino & Hotel Central City and Century Casino & Hotel Cripple Creek in Colorado, Century Casino Cape Girardeau and Century Casino Caruthersville in Missouri, Mountaineer Casino, Racetrack & Resort in West Virginia, Nugget Casino Resort in Nevada, and Rocky Gap Casino Resort in Maryland. In Canada, it operates Century Casino & Hotel Edmonton, Century Casino St. Albert, Century Downs Racetrack and Casino, and Century Mile Racetrack and Casino. Additionally, the company holds a 67% stake in Casinos Poland Ltd., which operates seven casinos in Poland.
Despite financial headwinds, Century Casinos has some positive factors working in its favor. The company’s diverse geographic presence, recent acquisitions, and property expansions are expected to provide some revenue stability. Additionally, the company does not face any immediate debt maturities, giving it time to restructure its finances. According to its latest financial reports, as of September 30, 2024, Century Casinos held approximately $119 million in unrestricted cash and maintained access to a $30 million revolving credit line available until April 2027. However, Moody’s has expressed caution over the company’s long-term ability to generate sustainable earnings, particularly as rising interest rates and economic slowdowns impact the gaming sector.
Following the credit downgrade, Century Casinos' stock (CNTY) saw minor fluctuations, currently trading at $3.22 per share, marking a 0.025% increase from the previous close. Investors remain cautious, awaiting further operational updates and financial restructuring strategies. Analysts have noted that casino operators with high leverage often face higher borrowing costs, which can squeeze profit margins and impact expansion plans.
Moody’s decision to downgrade Century Casinos reflects broader industry challenges, where smaller operators struggle to compete against industry giants with stronger balance sheets. While the company’s current liquidity position provides a temporary cushion, the pressure to improve earnings and reduce debt levels will remain crucial for long-term stability.
