By Paul A. Harris
Portland, Ore., June 19 – Colt Merger Sub, Inc. priced $6.2 billion of junk in three tranches backing the acquisition of Caesars Entertainment Corp. by Eldorado Resorts, Inc., according to market sources.
Bookrunners were Credit Suisse Securities (USA) LLC (lead on Caesars Entertainment), J.P. Morgan Securities LLC (lead on Eldorado Resorts), Macquarie, BofA Securities Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, SunTrust Robinson Humphrey Inc., U.S. Bancorp Investments Inc. and Citizens Capital Markets Inc.
The Caesars Entertainment portion of the deal came as a downsized $1 billion amount of five-year secured notes (B1/B+), which priced at par to yield 5¾%. The tranche was reduced from $1.05 billion. The yield printed at the tight end of the 5¾% to 6% yield talk. Initial guidance was in the high 5% area to 6%.
The Eldorado portion of the bond financing upsized to $5.2 billion from $4.995 billion.
It featured an upsized $3.4 billion tranche of five-year secured notes (B1/B) that priced at par to yield 6¼%. The tranche was upsized from $3.08 billion. The yield printed at the tight end of the 6¼% to 6½% yield talk, which came in line with early guidance in the low-to-mid 6% area.
The Eldorado portion also included a downsized $1.8 billion tranche of seven-year unsecured notes (Caa1/CCC+), which priced at par to yield 8 1/8%, at the tight end of the revised 8 1/8% to 8¼% yield talk. Earlier official talk was 8¼% to 8½%, tight to early guidance in the mid-to-high 8% area. The unsecured tranche was downsized from $1.875 billion.
The overall bond portion of the financing grew to $6.2 billion from $6.005 billion.
The secured tranches were heard to play to $8.1 billion of demand across 211 accounts, according to a trader who added that the unsecured tranche played to $6.4 billion of demand across 195 accounts.
The 5¾% secured notes due 2025 were par 7/8% bid, 101 offered late Friday afternoon, a trader said, and added that the 6¼% secured notes due 2025 were par ¾ bid, 101¼ offered, and the 8 1/8% unsecured notes due 2027 were also par ¾ bid, 101¼ offered.
Proceeds will be used to help fund the acquisition of Caesars by Eldorado, expected to close in mid-2020.
Caesars is a Las Vegas-based gaming and entertainment company. Eldorado is a Reno, Nev.-based gaming company. Upon completion of the transaction, the combined company will retain the Caesars name and be based in Reno.
| Issuer: | Colt Merger Sub, Inc.
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| Amount: | $6.2 billion
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| Bookrunners: | Credit Suisse Securities (USA) LLC (lead on Caesars Entertainment), J.P. Morgan Securities LLC (lead on Eldorado Resorts), Macquarie, BofA Securities Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, SunTrust Robinson Humphrey Inc., U.S. Bancorp Investments Inc. and Citizens Capital Markets Inc.
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| Trade date: | June 19
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| Marketing: | Roadshow
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| Caesars secured tranche
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| Amount: | $1 billion, decreased from $1.05 billion
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| Maturity: | July 1, 2025
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| Securities: | Secured notes
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| Coupon: | 5¾%
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| Price: | Par
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| Yield: | 5¾%
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| Call protection: | Two years
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| Price talk: | 5¾% to 6%
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| Eldorado secured tranche
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| Amount: | $3.4 billion, upsized from $3.08 billion
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| Maturity: | July 1, 2025
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| Securities: | Secured notes
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| Coupon: | 6¼%
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| Price: | Par
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| Yield: | 6¼%
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| Call protection: | Two years
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| Price talk: | 6¼% to 6½%
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| Eldorado unsecured tranche
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| Amount: | $1.8 billion, downsized from $1.875 billion
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| Maturity: | July 1, 2027
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| Securities: | Unsecured notes
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| Coupon: | 8 1/8%
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| Price: | Par
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| Yield: | 8 1/8%
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| Call protection: | Three years
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| Price talk: | 8 1/8% to 8¼%, revised from 8¼% to 8½%
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