UPDATE 1-S&P cuts GTECH rating to BBB- after IGT buy

Thu Jul 17, 2014 3:43pm EDT

(Adds Moody's statement)

MILAN, July 17 (Reuters) - Standard & Poor's has cut its rating for Italy's lottery operator GTECH and Moody's put it on review for a downgrade after the company said it was buying U.S. slot machine maker International Game Technology for $4.7 billion.

GTECH said on Thursday S&Ps had cut its rating on the company to BBB- from BBB without elaborating.

In a later statement, rival agency Moody's said it was reviewing the rating of both GTECH and IGT for a possible downgrade.

Moody's said its decision was due to its assessment that the new company's 5.0 times pro forma debt/EBITDA - excluding synergies - "is a level that we would typically consider high for a low investment grade rating."

"In addition, the exact capital structure that will be used to finance the merger has not yet been determined," said Senior Moody's Vice President Keith Foley.

"The possibility exists that any downgrade could be more than one notch and cause GTECH and IGT to lose their investment grade status, as well as prevent (the) NewCo from obtaining investment grade status," added Foley.

GTECH announced the deal on Wednesday. (Reporting by Silvia Aloisi, editing by William Hardy)

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