2017-12-28 13:54 ET - News Release
Mr. Justin Canivet reports
POYDRAS GAMING FINANCE CORP. ANNOUNCES COMPLETION OF DEBT REFINANCING
Poydras Gaming Finance Corp. has closed a one-stop financing arrangement with Prudential Capital Group, the private capital investment arm of PGIM, consisting of senior and subordinated debt in the amount of $41-million (U.S.). The new debt facility can be broken down as follows (all amounts stated in U.S. dollars):
Note purchase and revolving credit agreement dated December 28, 2017 (the "Senior Agreement") between the Company and its subsidiaries (the "Transaction Parties") and Prudential, consisting of $27.0 million as follows:
a $5,000,000 senior secured revolving credit facility (the "Revolving Loan");
a $4,000,000 delayed draw capital expenditure facility (the "Capex Note"); and
$18,000,000 senior secured notes (the "Term Notes", and together with the Revolving Loan and Capex Note, the "Senior Loans")
Note purchase agreement dated December 28, 2017 between the Transaction Parties and Prudential (the "Sub Agreement", and together with the Senior Agreement, the "Financing Agreement"), whereby the Company will issue $14,000,000 in senior subordinated notes (the "Subordinated Notes").
The Senior Loans are secured against all or substantially all of the assets of the Company, and any used portions will be priced at LIBOR plus 550 basis points ("bps"). Should any of the Revolving Loan or Capex Note remain undrawn, then the price will be reduced to 50bps on the unused portion. The Senior Loans will have a five year term and mature on December 28, 2022, with no mandatory amortization on the Revolving Loan and Capex Notes.
The Subordinated Notes will bear interest at 14.0% (12.0% cash interest, 2% "payment in kind"), require no principal amortization, and mature on December 28, 2023. In total, Prudential is providing $41,000,000 in committed capital to the Company with $32,000,000 funded at close. Additionally, in connection with the Subordinated Notes, Prudential will receive a pre-emptive right to purchase up to 5% of any future equity issuance at the same terms offered to other investors in the issuance.
Proceeds from the financing will be used to refinance existing indebtedness of the Transaction Parties, purchase additional gaming machines, and for general corporate purposes and strategic initiatives. The new Financing Agreement provides a cheaper all-in weighted cost of capital, reduced principal payments, and nearly $10.0 million of additional capital for continued growth.
"We're taking advantage of a healthy debt market to create a stronger capital structure for Poydras that reduces our overall borrowing costs by nearly 4% and supports our strategy for continued growth," said Peter Macy, Poydras CEO. "This new debt structure will free up cash flows for the benefit of our shareholders and provide us with new liquidity and flexibility to support our priorities for cash flow including making ongoing investments in our business. We are excited to have a new financial partner in Prudential and look forward to accelerated growth in 2018 and beyond."