Churchill Downs eyes new debt for Peninsula Pacific acquisition

Churchill Downs Inc. announced that it plans to fund its $2.485 billion acquisition of substantially all of the assets of Peninsula Pacific Entertainment, which is expected to close by the end of 2022, with a combination of new debt and cash on hand.

Funding will include proceeds from the pending sale of land near Calder Casino. Under the terms of the deal, Churchill Downs will assume approximately $850 million of debt at Peninsula and extinguish the debt immediately following closing.

The consolidated pro forma bank covenant leverage is projected to be less than 4.2x upon completion of the transaction, according to a statement.

As of Sept. 30, Churchill Downs had roughly $382 million outstanding under its term loan B, $295 million outstanding under its term loan B-1, $594 million under its 2027 senior notes and $698 million outstanding under its 2028 senior notes. The company also has a $700 million revolver due 2024.

In April 2021, Peninsula Pacific obtained a $300 million add-on to its 8.5% senior unsecured notes due November 2027. The initial $475 million of the 2027 bonds were placed in October 2020, and a $75 million tack-on was then placed in January 2021.

Peninsula Pacific is a Virginia-based gaming operator and is rated B/B3.

Churchill Downs is a racing, online wagering and gaming entertainment company. Corporate issuer ratings are BB/Ba3.