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Gateway Announces Refinancing

Published: February 3, 2017 1:32 pm ET

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Gateway Casinos & Entertainment Limited (‘Gateway’ or ‘Company’) announced today that it intends to complete a refinancing (the ‘Refinancing’) of its existing secured debt consisting of a new capital structure that will include a C$125 million senior secured revolving credit facility and a US$440 million senior secured term loan facility (together, the ‘New Senior Secured Credit Facility’) and US$255 million of second priority senior secured notes due 2024 (the ‘New Notes’).

The primary use of proceeds of the Refinancing will be to (i) repay all outstanding amounts under Gateway’s existing senior secured credit facility, (ii) redeem Gateway’s outstanding 8.50% Second Priority Senior Secured Notes due 2020 in the aggregate principal amount of C$200 million (the "Existing Notes"), and (iii) finance the acquisitions (the “Ontario Acquisitions”) from the Ontario Lottery and Gaming Corporation of certain gaming properties in Ontario, which are expected to be completed in the second quarter of 2017. The Ontario Acquisitions are expected to be immediately accretive to Gateway’s top-line growth, EBITDA margin and full year earnings. The use of proceeds will also include funding new developments and ongoing operations in Western Canada.

The Ontario Acquisitions include certain casinos in Thunder Bay and Sault Ste. Marie, slots in Sudbury (at Sudbury Downs) and two planned casino builds in Kenora and North Bay, as well as a casino in Point Edward and slots in Woodstock (at Woodstock Raceway), London (in the Western Fair District), Clinton (at Clinton Raceway), Dresden (at Dresden Raceway) and Hanover (at Hanover Raceway).

On the closing of the New Notes offering, Gateway intends to deliver a notice of redemption of the Existing Notes in accordance with the terms of the indenture governing the Existing Notes. The notice of redemption will state, among other things, the redemption date, the redemption price and the amount of accrued interest to the redemption date. The issuance of any redemption notice for the Existing Notes is conditional on the closing of the New Notes offering and there can be no assurance that such redemption notices will be issued.

It is expected that the notes will be offered and sold in Canada on a private placement basis and in the United States only to qualified institutional buyers under Rule 144A of the United States Securities Act of 1933, as amended (the “Securities Act”). The New Notes have not been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such an offer, solicitation, or sale would be unlawful.

The Gateway portfolio of gaming properties currently includes Grand Villa Casino in Burnaby, Starlight Casino in New Westminster, Cascades Casino in Langley, Lake City Casinos in Vernon, Kelowna and Penticton, Cascades Casino in Kamloops, Grand Villa Casino in Edmonton, Palace Casino in Edmonton, Chances Gaming Centres in Mission and Squamish, a Community Gaming Centre in Surrey, Chances Playtime Gaming in Abbotsford, Courtenay and Campbell River, and Playtime Gaming in Langley, Penticton and Victoria.

To view an official copy of the Gateway announcement, click here.

(Gateway Casinos & Entertainment Limited)

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