S&P rates Lucky Bucks, loans B

S&P said it gave B ratings to Lucky Bucks LLC and its planned $550 million senior secured credit facility. The facility’s recovery rating is 3, reflecting an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in default.

“The B issuer credit rating primarily reflects the highly competitive and fragmented nature of the Georgia COAM market (coin-operated amusement machine), limited geographic diversity, and our expectation for leverage of around 5x-6x through 2021. We also view the company's majority ownership by private equity firm Trive Capital as a risk given our belief that financial sponsors tend to employ debt to fund shareholder returns, which could result in elevated leverage over the long term.

“Somewhat offsetting these risks are the company's leading market share by revenue in the Georgia COAM market, industry-leading win per unit per day (Wpupd) in Georgia, long-term contracts with high renewal rates, strong profitability, and low capital intensity, which result in high predictability of revenues and good free cash flow generation,” S&P said in a press release.

Lucky Break’s credit facility will consist of a $50 million revolving credit facility due 2026 and a $500 million first-lien term loan due 2027. It plans to use the proceeds to refinance debt and fund a shareholder distribution.

The outlook is stable.

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