Scientific Games Lottery accelerates deadline for cross-border term loans

Timing is accelerated on the cross-border term loan B financing supporting the acquisition of Scientific Games' lottery business by Brookfield Business Partners, according to sources. Commitments to the deal, originally due Feb. 4, are now due by 10 a.m. ET on Feb. 3.

The financing is split between a $1.77 billion dollar-denominated tranche and a euro-denominated tranche totaling $750 million equivalent. The covenant-lite term loans will have a seven-year maturity and will include six months of 101 soft call protection.

Price talk for the dollar tranche is a spread of 375-400 basis points above the secured overnight financing rate, with a 0.5% floor and an original issue discount of 99.5. There is no credit spread adjustment on this tranche. The euro term loan is guided at E+425, with a 0% floor and an OID in the range of 99-99.5. There is no ticking fee for 60 days, and then the fee is 50% of the margin for days 61-120, stepping to 100% of the margin thereafter.

At talk, the yield to maturity is 4.41%-4.67% for the dollar term loan and 4.41%-4.49% for the euro.

Deutsche Bank leads a bookrunner group that includes Barclays, BNP Paribas, Credit Agricole, Macquarie, RBC Capital Markets, BMO Capital Markets, Citi, Goldman Sachs, HSBC, Morgan Stanley, MUFG, Societe Generale and Wells Fargo.

In addition to the term loan, the company is in market with an $880 million issue of eight-year (non-call three) senior unsecured notes. The company will also have a $440 million revolver due 2027 with a springing first-lien net leverage covenant.

Secured debt ratings came in at B+/B2/BB-, with recovery ratings of 3 and 2 from S&P Global Ratings and Fitch, respectively. The unsecured notes are rated B/Caa2 by Ratings and Moody's, with a recovery rating of 5. Corporate ratings are B+/B3/B, with stable outlooks from all three agencies.

Scientific Games Corp. announced in October 2021 that it was selling its lottery business to Brookfield Business Partners for $5.825 billion in cash, plus an earn-out of up to $225 million based on EBITDA targets in 2022 and 2023. In addition to the debt financing, funding for the transaction will include $2.5 billion of common equity, according to Ratings.

Scientific Games Lottery, based in Atlanta, is a diversified global lottery partner with long-standing relationships with approximately 130 government and nongovernment lottery entities in over 50 countries.