Gateway Casinos & Entertainment wraps $1.25B-equivalent term loan; terms

Gateway Casinos & Entertainment Ltd. has priced a $1.25 billion-equivalent six-year term loan B that is split between a $1.073 billion dollar-denominated tranche and a C$218.6 million Canadian dollar-denominated tranche, according to sources. The dollar-denominated tranche priced at 98 via lead arrangers Morgan Stanley and Fortress Credit and has a spread of 800 basis points over secured overnight financing rate and a credit spread adjustment, or CSA. The CSA is 10 basis points for the one-month rate and 15 bps for the three-month rate. The Canadian dollar tranche also priced at an original issue discount of 98 and a spread of 800 basis points over the Canadian dollar offered rate, or CDOR. Both facilities have a floor of 0.75% over Sofr+CSA and CDOR, respectively.

Additionally, there is a pay-in-kind option during the first 18-months of the loan, up to 300 bps, subject to a 150 bps premium. The facility will have hard calls of 103, 102 and 101 in years one, two and three, respectively. There is also a special redemption option for up to $400 million at 101 during the first three years, using proceeds from a qualified equity issuance or in connection with a merger or sale.

Proceeds from the deal will be used to refinance indebtedness. The issuer currently has a first-lien term loan due March 2025 (L+300, 0% floor) that was placed in March 2018 to refinance debt and pay a dividend. Gateway Casinos & Entertainment, backed by Catalyst Capital Group, is a gaming company.

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