S&P gives Scientific Games loans B+, notes B

S&P said it gave B+ issue and 3 recovery ratings to Scientific Games Holdings LP’s (SG Lottery) planned secured credit facilities, comprising a $440 million revolver due 2027, a $1.77 billion term loan B due 2029 and a $750 million equivalent euro-denominated term loan due 2029. The agency also assigned B with a 5 recovery rating to SG Lottery’s upcoming $880 million of unsecured notes due 2030.

Brookfield Business Partners plans to use the proceeds and $2.5 billion of common equity to acquire Scientific Games Corp.’s lottery business for $5.8 billion. S&P said assigned SG Lottery a B+ issuer rating.

“Our issuer credit rating primarily reflects SG Lottery's high debt leverage and financial-sponsor ownership despite the company's good market position and resilient cash flow base. Our forecast for high leverage in 2022 and 2023 and financial-sponsor ownership are key credit risks. Under our base-case assumptions for operating performance, we estimate adjusted leverage in 2022 will be in the 7.5x-8x range and decrease to 7x-7.5x in 2023,” S&P said in a press release.

The outlook is stable.

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