New Issue: Gateway Casinos prices $255 million seven-year secured notes at par to yield 8¼%

By Paul A. Harris

Portland, Ore., Feb. 15 – Gateway Casinos & Entertainment Ltd. priced a $255 million issue of seven-year second priority senior secured notes (Caa1/CCC+) at par to yield 8¼% on Wednesday, according to market sources.

The yield printed at the tight end of the 8¼% to 8½% yield talk and tight to initial guidance in the mid 8% area.

Morgan Stanley & Co., SunTrust Robinson Humphrey, BMO Capital Markets, Macquarie Capital, CIBC World Markets and National Bank of Canada Financial Markets were the joint bookrunners.

The Burnaby, B.C.-based owner of gaming properties plans to use the proceeds to refinance debt, as well as to fund the acquisition of two “Gaming Bundles” from the Ontario Lottery and Gaming Corp., to fund a dividend to shareholders and for general corporate purposes, including capital expenditures.

Issuer:	Gateway Casinos & Entertainment Ltd.
Amount:	$255 million
Maturity:	March 1, 2024
Securities:	Second priority senior secured notes
Bookrunners:	Morgan Stanley & Co., SunTrust Robinson Humphrey, BMO Capital Markets, Macquarie Capital, CIBC World Markets, National Bank of Canada Financial Markets
Co-manager:	ING
Coupon:	8¼%
Price:	Par
Yield:	8¼%
Spread:	593 bps
Call:	Make-whole call at Treasuries plus 50 bps until March 1, 2020, then callable at 104.125
Equity clawback:	40% at 108.25 until March 1, 2020
Trade date:	Feb. 15
Settlement date:	Feb. 22
Ratings:	Moody's: Caa1
	S&P: CCC+
Distribution:	Rule 144A and Regulation S for life
Price talk:	8¼% to 8½%
Marketing:	Roadshow

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