Affinity Gaming changes OID on $95 million second-lien term loan to 97

By Sara Rosenberg

New York, Sept. 28 – Affinity Gaming widened the original issue discount on its $95 million eight-year second-lien term loan (B3/CCC+) to 97 from 98.5, according to a market source.

Pricing on the second-lien term loan remains at Libor plus 825 basis points with a 1% Libor floor.

The second-lien term loan still has call protection of 102 in year one and 101 in year two.

Allocations are expected later this week, the source said.

Along with the second-lien term loan, the company is getting a $30 million incremental first-lien term loan due July 1, 2023 (B1/B+) priced at Libor plus 400 bps with a 1% Libor floor, which matches existing first-lien term loan pricing.

The incremental first-lien term loan is being issued at par, after tightening last week from original issue discount talk of 99.5.

All of the first-lien term loan debt is getting 101 soft call protection for six months.

Proceeds from the new debt and equity will be used to fund the buyout of the company by Z Capital Partners LLC, which currently owns about 41% of Affinity’s outstanding shares.

Z Capital will purchase Affinity’s remaining outstanding shares for $17.35 per share in cash. The transaction values Affinity at about $580 million.

With this transaction, the company is seeking an amendment to its existing $375 million first-lien term loan (B1/B+) due July 1, 2023.

The amendment request underwent some changes last week, including increasing the consent fee to 20 bps at the closing of the amendment and 20 bps at the completion of the transaction, from 10 bps at amendment closing and 10 bps at transaction closing.

Also, the unlimited restricted payments incurrence ratio is increasing to 3.25 times from 3 times, instead of increasing to 3.5 times as originally proposed, and the unlimited investments incurrence ratio test is increasing to 4 times from 3.5 times, instead of increasing to 4.5 times.

Citizens Bank, Credit Suisse Securities (USA) LLC and Fifth Third Bank are the leads on the new term loan debt, and Credit Suisse is the lead on the amendment.

Closing is expected in the first quarter of 2017, subject to shareholder approval, regulatory approvals, including by gaming regulators in the four states in which Affinity is licensed, expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary conditions.

Affinity Gaming is a Las Vegas-based diversified casino gaming company.

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