A Deutsche Bank-led bookrunner group has finalized terms of the cross-border term loan B financing supporting the acquisition of Scientific Games' lottery business by Brookfield Business Partners, according to sources. Investors are being asked to reconfirm commitments by today at 1 p.m. ET, and pricing and allocations are expected to follow Feb. 4.
Tranche sizes are revised to increase the dollar portion of the deal to $2.1 billion, from an initial target of $1.77 billion, while the euro tranche was decreased by the euro equivalent of $250 million, to $500 million, for a final total of roughly €439 million. Note that the tranche revisions also incorporate a shift of $80 million to the dollar TLB from the accompanying bond deal, which is now $800 million.
Pricing on the dollar term loan is set a spread of 350 basis points over the secured overnight financing rate, with a 0.5% floor and an original issue discount of 99.75. There is no credit spread adjustment on this tranche. Initial price talk at launch was S+375-400 with an OID of 99.5, before a revision that tightened the spread range to S+350-375.
The euro term loan pricing is E+400, with a 0% floor and an OID of 99.5, versus E+425 with an OID of 99-99.5 at launch.
The covenant-lite term loans will have a seven-year maturity and will include six months of 101 soft call protection. 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 final terms, the yield to maturity is 4.11% for the dollar tranche and 4.16% for the euro.
Additional bookrunners on the deal are 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 $800 million offering of eight-year (non-call three) senior unsecured notes and 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 more than 50 countries.
