Fitch Comments on Seminole Lawsuit

On May 22, 2006 the Seminole Tribe of FL (the tribe) filed a claim in Broward County, FL court stating that the financial services agreement (FSA) between the tribe and Power Plant Entertainment, LLC. (PPE) originally executed in 2000, is illegal. Under the terms of the FSA the tribe pays PPE 30% of net revenues from three of the tribe's six gaming facilities; Tampa Hard Rock, Hollywood Hard Rock and Seminole Indian Casino, Hollywood (together Tampa/Hollywood). The remaining 70% flows to the tribe and is pledged to bondholders.

The tribe continues to honor its obligation to PPE on a monthly basis and has expressed its intention to maintain such payments pending a court decision on the claim. PPE has until Monday, June 12th to respond to the tribe's claim and to date, has not filed any official correspondence.

Fitch believes that rating action at this time would be premature. If PPE files any correspondence by the June 12, 2006 deadline Fitch will conduct further review and provide additional comments to the market. Any potential impairment of pledged revenues or deterioration of the general credit profile of the tribe could create negative pressure on the rating.

Fitch assigned an 'A-' rating to the tribe's Gaming Division Revenue Bonds Series 2005 A & B on September 26, 2005. Security for the bonds is primarily derived from earnings before interest, taxes, depreciation and amortization of the tribe's Immokalee, Brighton and Coconut Creek gaming facilities and from net revenues of the Tampa/Hollywood facilities, excluding payments to PPE. Credit strengths supporting the 'A-' rating include strong legal protections, ample debt service coverage, solid competitive position and revenue diversity across six gaming facilities and sound financial management at both the governmental and gaming operations.

At the time of the rating assignment Fitch identified the key credit risk as uncertainty regarding the tribe's contractual relationship with PPE. Prior to filing the claim in court, the tribe and PPE were negotiating a buy-out of the FSA and Fitch was concerned that any bonded settlement by the tribe could reduce debt service coverage. This credit risk is still applicable.

2006-06-09