(Bloomberg) -- Gateway Casinos & Entertainment Ltd., one of Canada's largest gambling companies, is working with bankers to explore an initial public offering or sale, people familiar with the matter said.
Gateway, backed by private equity firm Catalyst Capital Group, has hired Canadian Imperial Bank of Commerce, Morgan Stanley and Credit Suisse Group AG to advise on the potential share sale, said the people, who asked not to be identified because the matter is private.
Morgan Stanley is also advising on a possible sale, which is being run in parallel to determine which option would yield the highest valuation for Gateway, said the people.
While the company is running a dual-track process, it would prefer an IPO this year in which it would seek to raise as much as C$400 million ($329 million), one of the people said. That would value the company at about C$2.5 billion, the person said.
The proceeds from an IPO are likely to be used to reinvest in new and existing properties, the people said. No final decisions have been made, and Gateway may choose not to pursue a sale or listing, they said.
Representatives for Gateway, Catalyst and Credit Suisse declined to comment. Representatives for CIBC and Morgan Stanley didn't immediately respond to requests for comment.
Casino Deals
The casino industry is seeing a flurry of deals, as betting climbs modestly and operators look for growth through acquisitions. Many financial buyers who entered the business after the 2008 recession are now seeking to exit those positions. Last month, investor Carl Icahn sold the unfinished Fountainebleau casino in Las Vegas to New York developer Steven Witkoff for $600 million, four times what he paid for the property in 2010.
Toronto-based Catalyst was said to be weighing an IPO of Gateway in late 2015 before investor interest for new issuances in Canada dried up, people familiar with the matter said at the time. It also tried to take Gateway public in 2012 and withdrew that IPO.
Gateway eventually issued $791 million in new debt to refinance its borrowings and issued a special dividend to fund an expansion into Ontario.
In December, Gateway, based in Burnaby, British Columbia, was selected by the Ontario Lottery & Gaming Corp. as the service provider for several casinos and slots in Northern and Southwestern Ontario. The company has more than 6,100 employees and operates 26 gaming properties in British Columbia, Alberta and Ontario, according to its website.
--With assistance from Sarah Mulholland
To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net, Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Crayton Harrison at tharrison5@bloomberg.net, Michael Hytha, David Scanlan
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