News: TNA to Finance through DebtI'm a little late on this...
2007-05-25 12:54 ET - News Release
Mr. Dan Sutherland reports
EVERGREEN GAMING CORPORATION ANNOUNCES DEBT FINANCING
Evergreen Gaming Corp. has entered into an engagement letter with a major financial institution pursuant to which the agent has been retained as sole placement agent to raise for the company, on a best efforts basis, up to $35-million (U.S.) through the issuance of debt securities. Debt securities or other debt placed by the agent will be with a limited number of sophisticated lenders, and the terms of any debt securities issued will be subject to negotiation based on prevailing market conditions. Particulars of debt instruments and other debt actually issued by the company will be announced at the time agreements are entered into. The individual issuances of debt securities or other debt will be subject to the approval of the TSX Venture Exchange.
The company has identified the need for, and expects to draw down initially, the sum of $26-million (U.S.) to be used for the purposes set forth in the following. The balance of $9-million (U.S.) in available financing is expected to be reserved as a standby facility, on a basis to be negotiated, to be available to finance future acquisitions or other capital needs.
The agent will receive a financing fee in an amount customary for a transaction of this nature. The company will also be subject to other fees as set forth in the engagement letter with respect to sales of debt securities or other debt for a period of nine months after termination of the engagement letter, or in the event the company terminates the engagement letter in order to pursue a sale of all or a significant portion of the assets or securities of the company.
Of the $26-million (U.S.) to be drawn down initially, approximately $6-million (U.S.) will be used to consolidate a portion of the outstanding debt of the company's wholly owned subsidiary, Washington Gaming Inc., and for a planned renovation (approximately $500,000) of the Silver Dollar Casino in Calgary, referred to in the following.
The remaining $20-million (U.S.) ($22-million) will be used to complete the acquisition of FSSD Holdings Ltd., the parent company of Frank Sisson's Silver Dollar Casino and Entertainment Centre, as reported in Stockwatch on May 18, 2007. The Silver Dollar is a 120,000-square-foot casino and entertainment complex located in southeast Calgary. The complex and adjoining parking lots occupy seven acres of land with an estimated market value of $12-million.
Based on the last four years of audited results, the Silver Dollar averaged revenue of $10.6-million and earnings before interest, taxes, depreciation and amortization of $2.2-million. Revenue and EBITDA for the financial year ended July 31, 2006, was $10.1-million and $1.7-million, respectively, due to a construction disruption resulting from a 20,000-square-foot live entertainment addition that will be completed prior to closing.
This acquisition, Evergreen's first in Canada, is scheduled to close prior to Sept. 30, 2007, subject to TSX Venture Exchange and Alberta Gaming and Liquor Commission regulatory approval.
We seek Safe Harbor.
Good move as the shareholders will not face immediate dilution. Need to see the terms though. The management appear to be making the right moves with this deal.