JPMorgan, Credit Suisse Ready $7.2 Billion Debt Sale for Casinos

(Bloomberg) -- A group of banks led by JPMorgan Chase & Co. and Credit Suisse Group AG is readying a $7.2 billion debt offering to finance Eldorado Resorts Inc.’s acquisition of Caesars Entertainment Corp., according to people familiar with the matter.

Lenders began marketing some of the debt, among the largest commitments signed before the Covid-19 pandemic, on Tuesday, said the people, who asked not to be named because the discussions are private. The offering is expected to include leveraged loans and high-yield bonds, they said.

The banks agreed to the financing a year ago, and recently negotiated better terms that give them flexibility to shift a substantial portion of the debt from leveraged loans to secured bonds, according to the people.

That change isn’t expected to impact the company’s borrowing costs materially, but it will relieve banks from their original commitment to sell around $5.2 billion of the debt in the loan market where prices remain below levels reached before the outbreak, one of the people said.

The deal with be financed with a mix of Caesars and Eldorado debt. Credit Suisse is leading the debt sale for Caesars, while JPMorgan leads the financing for Eldorado.

Representatives for Credit Suisse, Eldorado and JPMorgan declined to comment. A representative for Caesars declined to comment on the financing but said the company continues to work toward the closing of the acquisition.

The purchase of Caesars is one of the riskiest deals yet to close from the pre-virus era, and will make Eldorado -- once a small, family-run casino business -- the largest operator of gambling establishments in the U.S. The company is also planning to issue new shares, sell some Las Vegas real estate and take other steps to strengthen its finances. The stock offering could generate about $800 million.

Leveraged loan prices have recovered to about 90 cents on the dollar, while an ebullient credit market has seen junk bonds recoup nearly all of their losses this year. Other acquisition financings including for Apollo Global Management Inc.’s buyout of Tech Data Corp have also launched this week. Radio Systems Corp., which owns PetSafe, is marketing a $625 million junk bond offering to finance its buyout by Clayton, Dubilier & Rice.

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