Station Casinos LLC has priced a $500 million offering of 4.625% 10-year senior notes via joint bookrunners BofA Securities, Deutsche Bank, Wells Fargo, J.P. Morgan, Fifth Third, Citizens, BNP Paribas, Truist, Citi, Goldman Sachs and KeyBanc Capital Markets, according to market sources. The deal finalized at the tight end of guidance circulated in the 4.75% area.
The net proceeds, together with borrowings under a revolving credit facility, will be used to pay a special dividend of approximately $344 million to holders of the company's outstanding limited liability company interests, including parent Red Rock Resorts Inc., and to purchase up to $350 million of its common stock via an equity tender offer. Proceeds will also be used for general corporate purposes.
Moody's today upgraded the issuer rating on Station Casinos to B1 from B2, and it boosted the unsecured rating to B3 from Caa1 and the secured revolver and term loan ratings to Ba3 from B1. The outlook is stable. Moody's cited the improvement in operating performance since the company's casinos reopened, "including robust free cash flow generation that exceeded $500 million over the last 12 months and a reduction in debt-to-EBITDA to below 4.0x as of September 2021."
S&P Global Ratings today assigned a B- grade to the proposed notes and placed the rating on CreditWatch with positive implications, in the context of an upgrade review in place for the B+ issuer rating on Station Casinos since May 12. Ratings said it believes the company could sustain adjusted leverage below 5x in 2022 through EBITDA generation and the benefit of asset sale proceeds to be received by the end of 2021 but noted the "issuance of incremental debt to fund share repurchases and a special dividend reflects a shift to a more aggressive financial policy compared to the company's recent use of cash flow to voluntarily reduce debt."
Station Casinos develops and operates casino entertainment properties in the U.S.
Terms:
| Issuer |
Station Casinos LLC |
| Ratings |
B-/B3 |
| Amount |
$500 million |
| Issue |
Senior notes (144A/Reg S for life) |
| Coupon |
4.625% |
| Price |
100 |
| Yield |
4.625% |
| Spread |
T+310 |
| Maturity |
Dec. 1, 2031 |
| Call |
Non-call life (par call 6-months prior to maturity) |
| Trade (date) |
Nov. 10, 2021 |
| Settle |
Nov. 26, 2021 (T+10) |
| Joint bookrunners |
BofA/DB/WF/JPM/FT/Citizens/BNPP/Truist/C/GS/KeyBanc |
| Price talk |
4.75% area |
| Notes |
Change of control put at 101%; up-to-35% equity claw at 104.625% prior to Dec. 1, 2024; make-whole at T+50 prior to June 1, 2031. |
