Gateway Casinos pursues $1.3 billion private debt deal for refinancing and dividend payment

Gateway Casinos & Entertainment, one of Canada's largest gaming companies, is reportedly exploring a private debt deal of up to C$1.8 billion ($1.3 billion) to refinance its existing loans and issue a dividend to its owners.

Working with Morgan Stanley, Gateway has begun reaching out to potential lenders, sources familiar with the discussions told Bloomberg, noting that the deal’s size and terms could still change as talks progress.

This move by Gateway comes amidst increasing competition between the private credit market, currently valued at $1.7 trillion, and the traditional syndicated loan market. The private credit sector has been growing rapidly as it seeks out new opportunities for deal financing, particularly by taking on riskier borrowers or offering creative lending solutions.

Catalyst Capital Group, led by Newton Glassman, has owned Gateway since 2009. The company, which operates 31 properties, has explored other strategic options, including a potential sale, in recent years.

If successful, this financing would be one of Canada’s largest private debt deals in 2024, following similar efforts in the U.S. where companies like Pure Fishing Inc. and Lycra Co. have also turned to private debt for substantial funding needs.

In a similar recent move, Great Canadian Gaming Corp., another Canadian gaming company backed by Apollo Global Management Inc., launched a $665 million term loan on Wednesday in the U.S. leveraged loan market for its own debt refinancing efforts.