LINCOLN – The credit research division at Standard & Poor’s has lowered its rating for Twin River operator UTGR Inc. for the second time this year, this time to “D” from the previous “CCC-.”

In its Friday decision, S&P cited UTGR’s failure to make “the Sept. 2, 2008, interest payment on [its] second-lien senior secured term loan,” a failure that “constitutes an event of default.”

That default and the new ratings action “stem from the company’s recent announcement that it has secured an extended forbearance agreement with the first-lien lenders, and under the terms of the forbearance agreement, UTGR will suspend interest payments to its second-lien lenders,” S&P analysts wrote.

In March – also citing a missed loan payment – S&P had reduced its ratings for the company to “CCC-” from its previous “B-,” while keeping UTGR on “credit watch negative.” And in an industry report this summer (“Industry Report Card: U.S. Gaming, Lodging, And Leisure Companies Feeling The Pinch Of The Struggling Economy,” July 24), the ratings agency wrote that “the Twin River casino has substantially underperformed since an expansion and renovation of the asset was completed in 2007.”

UTGR – formerly known as Burrillville Catering Inc. – is a subsidiary of BLB Investors LLC, the joint venture of Kerzner International, Starwood Capital Group and the Waterford Group that acquired Lincoln Park in 2004, then spent about $225 million transforming it into the new Twin River.

The 160,000-square-foot addition has helped boost gambling revenue at Twin River by about 20 percent compared with a year ago, based on R.I. State Lottery data. The slot parlor also has succeeded in luring more patrons from the Ocean State and nearby Massachusetts, according to the Center for Policy Analysis at the University of Massachusetts–Dartmouth. (READ MORE)

But the slumping economy has made it difficult for BLB to recover the cost of the expansion, the company has said in seeking concessions from the State of Rhode Island. (READ MORE)

Last month, fellow ratings giant Moody’s Investor Service said it was considering a downgrade of Waterford Gaming LLC, a partner in the 2004 purchase of the former Lincoln Park and its renovation and renaming as Twin River. Moody’s cited the company’s relationship to the Mohegan Tribal Gaming Authority and its Mohegan Sun casino. (READ MORE)

“The recent downgrading by Standard & Poor’s reflects the precarious position BLB is in, and the market’s assessment of our ability to pay the debt owed to our lenders,” Twin River spokeswoman Patti Doyle, of RDW Group, said in a statement.

“As was announced last week – when the forbearance period was extended to Jan. 31, 2009 – we have suspended payments to our second-lien holders, which places us in default of those loans. During these next months, we will continue to work closely with our lenders, vendors and the State of Rhode Island to reach a satisfactory resolution for all our constituencies,” she said.

Additional information about Twin River and its owners, BLB Investors LLC, is available at www.TwinRiver.com.

Standard & Poor’s – a member of The McGraw-Hill Cos. – is a provider of financial research, credit ratings and risk analysis. Additional information, including S&P scores for Rhode Island and other bonds, is available at www.StandardAndPoors.com.