Scientific Games Lottery sets investor call for $880M bond offering

A Barclays-led bookrunner group has scheduled an investor call for today at noon ET in connection with the acquisition of Scientific Games' lottery business by Brookfield Business Partners, according to sources. The bond offering is structured as $880 million of eight-year senior unsecured notes. Pricing for the deal is expected Feb. 3.

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. Scientific Games Corp. announced in October 2021 that it was selling the lottery business to Brookfield Business Partners for a total consideration of $6.05 billion, comprising $5.825 billion in cash plus an earnout of up to $225 million based on EBITDA targets in 2022 and 2023.

A seven-year, covenant-lite cross-border term loan B split between a $1.77 billion dollar-denominated tranche and a $750 million-equivalent, or roughly €662 million, euro-denominated tranche also supports the transaction. In addition to the debt financing, funding will include $2.5 billion of common equity, according to S&P Global Ratings.

Deutsche Bank, BNP Paribas, Credit Agricole, Macquarie, RBC Capital Markets, BMO Capital Markets, Citi, Goldman Sachs, HSBC, Morgan Stanley, MUFG, Société Générale and Wells Fargo are also bookrunners for the bonds. The fixed-rate debt will be non-callable for three years, with a first call at par plus 50% of the coupon. The notes will also sport an up-to-40% equity claw at par plus the coupon for three years.

Scientific Games Holdings LP, the issuing entity for the debt, is rated B+/B3/B with stable outlooks at Ratings, Moody's and Fitch. The senior notes are rated B/Caa2/B. The term loan has garnered B+/B2/BB- grades.