TEXT-S&P: International Game Technology rating unaffected by stock buyback
June 14 - Standard & Poor's Ratings Services said today that its 'BBB' rating and stable outlook on Nevada-based International Game Technology (IGT; BBB/Stable/--) are not currently affected by the company's announcement of a new $1 billion share repurchase program and a $400 million accelerated stock buyback. IGT expects to fund the accelerated stock buyback with excess cash and revolver borrowings. As of March 31, 2012, IGT had approximately $270 million of cash on the balance sheet and $726 million of availability on its revolving credit facility. We had already been factoring in an expectation that IGT would increase its level of share repurchases in fiscal 2012, given its discretionary cash flow generation and the removal of limitations on restricted payments under its credit facility. Although the amount of the announced buyback exceeds our previously outlined expectation for $250 million in share repurchases, we expect leverage will increase by less than 0.5x to the mid-2x area pro forma for the share repurchase. We believe this still provides adequate cushion relative to our maximum 3x leverage threshold at the 'BBB' rating for IGT, given our assessment of IGT's business risk profile as "satisfactory." We expect that, in general, IGT will maintain a cushion relative to our maximum threshold for the rating to provide the company with sufficient flexibility to withstand volatility in operating performance.
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