Texas Billionaire Eyes $200 Million Payday in Loan-Market Frenzy

(Bloomberg) -- Tilman Fertitta is looking to take advantage of red-hot investor demand for leveraged loans to finance a $200 million payday.

Fertitta’s Golden Nugget Inc., the company on top of his hotel and casino empire, is seeking to finance the dividend as part of a broader refinancing deal. The payout is double what the billionaire had initially targeted and it’s going to cost less that originally expected, according to people with knowledge of the matter who asked not to be named because they’re not authorized to speak publicly.

The transaction underscores just how hungry investors have become for higher-yielding debt in spite of concerns over the impact of the coronavirus epidemic on the global economy. Companies have boosted their borrowings and cut interest rates on existing loans in recent weeks as institutional investors keep buying. Private equity firms have also seized on the trend to trim the size of their equity checks on new buyouts.

Investors in the deal are also letting the company cut the interest rate it pays on $2.4 billion of existing loans by a quarter of a percentage point, the people said.

Read more: Leveraged loan mania is back and borrowers are piling in

A spokeswoman for Golden Nugget confirmed the dividend will be distributed to Fertitta Entertainment, which is fully owned by Tilman Fertitta.

Fertitta is one of the richest people in Texas, with a net worth of about $5 billion, according to the Bloomberg Billionaires Index, thanks to his casino holdings and stakes in restaurants including Bubba Gump Shrimp and Landry’s. In an unexpected move last year, he also snatched up Del Frisco’s Restaurant Group Inc., a steakhouse chain popular with the Wall Street crowd.

Fertitta has enlisted the help of Jefferies Financial Group Inc. on the latest deal. He has a history of turning to the leveraged loan market to finance transactions, including his $2.2 billion purchase of the NBA’s Houston Rockets in 2017, as well as the Del Frisco’s takeover.

Jefferies declined to comment.

--With assistance from Jeannine Amodeo, Tom Metcalf and Pierre Paulden.

To contact the reporter on this story: Davide Scigliuzzo in New York at dscigliuzzo2@bloomberg.net

To contact the editors responsible for this story: Natalie Harrison at nharrison73@bloomberg.net, Boris Korby

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