Speedway Motorsports (TRK) Rating Raised to 'BB+' by S&P

Standard & Poor's Ratings Services said it raised its corporate credit rating on Charlotte, N.C.-based Speedway Motorsports Inc. (NYSE: TRK) to 'BB+' from 'BB'. The outlook is stable.

At the same time, we assigned our '1' recovery rating and 'BBB' issue-level rating to the company's proposed $300 million senior secured credit facility due 2019 (consisting of a $100 million revolver and a $200 million term loan A). The '1' recovery rating reflects our expectation for full recovery prospects for lenders (90% to 100%) in the event of a payment default. The company plans to use the proceeds to repay debt. Additionally, we raised our issue-level rating on SMI's $250 million senior unsecured notes due 2019 to 'BB+' from 'BB', in line with the upgrade of the company. The '4' recovery rating on the notes is unchanged and reflects our expectation for average (30% to 50%) recovery for lenders in the event of a payment default.

"The upgrade reflects our belief that the company can improve and will likely sustain adjusted debt to EBITDA to below 3x in 2015, which is in line with an improved intermediate financial risk assessment," said Standard & Poor's credit analyst Emile Courtney.

The stable outlook reflects our view that a high proportion of contractually increasing and recurring revenues from broadcasting through 2015 can partly offset weak admissions revenue and support credit measures consistent with the intermediate financial risk assessment and our 'BB+' rating.

We could lower our rating if admissions revenue declines substantially (likely from an unexpected worsening in economic conditions) in a manner that causes SMI to sustain debt to EBITDA above 3x.

Based on our assessment of SMI's business risk profile as fair, a higher rating would be contingent upon our expectation that debt to EBITDA could remain below 2x, a scenario we view as unlikely unless attendance revenue realizes significant growth.

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