Station Casinos sets investor call for $500M senior notes offering

Station Casinos LLC is in market today with a $500 million offering of 10-year senior notes. Pricing for the deal will follow an investor call at 11 a.m. ET. Joint bookrunners are BofA Securities, Deutsche Bank, Wells Fargo, J.P. Morgan, Fifth Third, Citizens, BNP Paribas, Truist, Citi, Goldman Sachs and KeyBanc Capital Markets.

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.

The bonds will be non-callable for life, with a par call at six months prior to maturity. The equity clawback will be for up to 35% at par plus the coupon for the first three years.

S&P Global Ratings today assigned a B- grade to the proposed notes and placed the rating on CreditWatch with positive implications. The agency's B+ rating on Station Casinos remains on CreditWatch, where it was placed with positive implications on 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 this year 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."

At Moody's, Station Casinos' existing unsecured debt is rated Caa1, while the corporate rating is B2. The outlook is stable.

Station Casinos develops and operates casino entertainment properties in the United States. The issuer has an existing tranche of 4.5% senior notes due 2028, which were priced at par in January 2020. The bonds closed Nov. 9 at 101.25, yielding 4.08%, trade data show.