Scientific Games shares rallied almost 18% today, to $11.33, and debt backing the issuer edged higher after investors learned on a conference call that a long-awaited M&A bond deal is expected to launch to syndication within the next two weeks, according to a conference call transcription. Management said they accelerated the timing on third-quarter results, as did takeover target Bally Technologies, so as to be “better positioned to go to the marketplace,” the filing shows.
As outlined earlier, the acquisition financing calls for $2.485 billion of new secured debt, to be split between term loans and secured notes, along with $2.7 billion of new unsecured notes. The bonds are backstopped, of course, by fully committed bridge financing via J.P. Morgan, Bank of America, and Deutsche Bank.
In the loan market, Scientific Games $2 billion, seven-year B-2 term loan (L+500, 1% LIBOR floor) advanced to 98/98.75 today, from 97.5/98 yesterday, sources said. The covenant-lite B-2 loan was issued in September at 99 to support the Bally transaction.
As for bonds, Scientific Games 6.625% subordinated notes due 2021 changed hands at 80.25, up from 78 amid the market rout two weeks ago. Recall that the B-/B3 paper fell into a bit of price discovery just below 80 on Monday when press reports circulated about the syndication of the bridge loan.
Indeed, a Bloomberg News report claimed the syndication effort was “pulled,” citing unnamed sources. Market sources, however, relay it’s an ongoing effort that’s fully underwritten, yet to close, and still not funded.
With the target for a primary high-yield market execution now outlined as “within the next two weeks,” the deal sits on the LCD shadow backlog of business. Tranching is now expected to be $485 million secured and $2.7 billion unsecured in two series. Details are available online to subscribers at LCD U.S. High-Yield Forward Calendar. –Staff reports