TEXT-S&P rates Isle Of Capri Casinos notes 'CCC+'

Overview
-- U.S. casino operator Isle of Capri plans to issue $350 million of
senior subordinated notes due 2020.
-- We are assigning our 'CCC+' issue-level rating to the notes with a
recovery rating of '6'.
-- The company intends to use the proceeds to refinance its 7% senior
subordinated notes due 2014.
-- We are placing our issue-level rating on the company's 7.75% senior
notes due 2019 on CreditWatch with positive implications.

Rating Action
On July 24, 2012, Standard & Poor's Ratings Services assigned its 'CCC+'
issue-level rating to St. Louis-based Isle of Capri Casino Inc.'s
planned $350 million senior subordinated notes due 2020. The recovery rating is
'6', indicating our expectation for negligible (0% to 10%) recovery for
noteholders in the event of a payment default. Isle plans to use the proceeds to
refinance its 7% senior subordinated notes due 2014 ($357 million outstanding).

We are placing our issue-level rating on the company's 7.75% senior notes due
2019 on CreditWatch with positive implications. As part of the senior
subordinated notes refinancing, the maturities of the company's revolving
credit facility and term loan will be extended to 2016 and 2017, respectively,
from 2013. With the extended maturities, our default year under our simulated
default scenario has been pushed out versus our previous analysis, resulting
in a lower level of secured debt outstanding and improved recovery prospects
for the senior notes. On completion of the new notes offering, we expect to
revise our recovery rating on the 7.75% senior notes upward to '4'
(expectation of 30% to 50% recovery) from '5' (10% to 30% recovery) and raise
our issue-level rating to 'B' from 'B-', in accordance with our notching
criteria.

Rationale
The corporate credit rating on Isle is 'B' and the rating outlook is stable.
The rating reflects our assessment of Isle's financial risk profile as "highly
leveraged" and its business risk profile as "fair," according to our rating
criteria.

Our assessment of Isle's financial risk profile as highly leveraged reflects
our expectation that adjusted leverage will remain over 6x in the near term
and our expectation that the company will generate negative free operating
cash flow in fiscal 2013. These factors are offset by minimal near-term
maturities, the company's good interest coverage, and "adequate" liquidity.

Our assessment of Isle's business risk profile as fair reflects its
geographically diverse portfolio, despite locations facing competitive
pressures because of the second-tier market position of many of its
properties, and the company's focus on regional gaming markets, which
experienced a lower level of revenue volatility over the last economic cycle
than destination markets. Additionally, the near-term opening of the Cape
Girardeau casino will improve Isle's diversity and its opening, along with
planned asset refurbishment projects across the portfolio, will enhance the
company's asset quality.

Recovery analysis
For the latest recovery analysis, see Standard & Poor's recovery report on
Isle of Capri Casinos, to be published following this report on RatingsDirect.

CreditWatch
In resolving our CreditWatch listing, we will monitor the progress of the
proposed transactions, including the tender offer for the senior subordinated
notes due 2014, and expect to raise our issue-level rating on the senior notes
once the transactions are completed.

Related Criteria And Research
-- Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Sept. 28, 2011
-- Use Of CreditWatch And Outlooks, Sept. 14, 2009
-- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009
-- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List

Isle of Capri Casinos Inc.
Corporate Credit Rating B/Stable/--

New Ratings

Isle of Capri Casinos Inc.
Subordinated
US$350 mil sr nts due 2020 CCC+
Recovery Rating 6

Rating Placed On CreditWatch; Recovery Rating Unchanged
To From
Isle of Capri Casinos Inc.
Senior Unsecured B-/Watch Pos B-
Recovery Rating 5 5

Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.