Billionaire Fertitta’s Golden Nugget Taps Loan Market to Refinance Debt

(Bloomberg) -- Billionaire Tilman Fertitta kicked off a $5.6 billion refinancing of his casino and restaurant empire, just one month after nixing plans to bring the business public through a merger with a blank-check company.

Fertitta's Golden Nugget Inc. is tapping the leveraged loan and junk bond markets to refinance its balance sheet. The company launched a $1.85 billion seven-year loan to investors on Wednesday morning, and is expected to soon come forward with two additional bond offerings, according to a person familiar with the matter.

Fertitta Entertainment Inc., which owns Golden Nugget and the Landry's restaurant group, had agreed to merge with special purpose acquisition company Fast Acquisition Corp. in early 2021 in a $8.6 billion transaction. But Fertitta later terminated the deal in December. Fertitta Entertainment ultimately paid as much as $33 million to end the planned merger.

Fertitta now is selling debt while markets are hot. Leveraged loans are in high demand because their floating rate pricing structure guards investors against rising rates. And lower-rated junk bonds are also faring better than other asset classes because their lower duration and credit-specific risk make them less correlated to interest rates.

Bond Sales

Aside from the seven-year loan, Golden Nugget also plans to issue a $1.85 billion secured bond, a $1.85 billion unsecured bond and to put in place a new $500 million revolving credit facility. Proceeds from the loan and bond sales will be used to refinance existing debt, the person said, asking not to be identified discussing a private transaction.

A lender call for the loan will be held Wednesday at 4 p.m. New York time.

A representative for Jefferies Financial Group Inc., which is leading the loan deal, declined to comment. A representative for Golden Nugget did not immediately respond to a request for comment.

The loan and bond deals already had a significant amount of orders from investors before launching, different people familiar with the matter said. The bond is expected to launch on Monday and price on Thursday, they added.

Early pricing discussions for the loan are at 400 basis points over the Secured Overnight Financing Rate, they said. The secured bond is expected at around a 4.5% yield with a seven-year maturity, and the unsecured at 6.25% with an eight-year maturity, they added.

Golden Nugget's existing $1.345 billion 6.75% unsecured notes due 2024 last traded at around par, according to Trace bond pricing data.