Golden Nugget Owner Wants $5.5 Billion to Help Refinance Existing Debt

Tilman Fertitta, the owner of the Golden Nugget brand, has launched a $5.6-billion refinance exercise of his casino and restaurant business. It comes just one month after the company dropped plans to merge with a blank-check entity.

Big Money for Big Stakes

Fertitta’s Golden Nugget Inc. approached the leveraged loan market and junk bond markets for its refinancing. Bloomberg reports that, according to one person familiar with this matter, the company issued a $1.85-million seven-year loan for investors Wednesday morning. Two additional bonds offerings are expected soon.

Fertitta Entertainment Inc. owns Golden Nugget and Landry’s restaurant chain. In a transaction worth $8.6 million, Fast Acquisition Corp. had agreed to merge its special purpose acquisition company (SPAC) with the company. However, Fertitta terminated the agreement in December. Fertitta Entertainment eventually paid $33 million to terminate the planned merger.

Fertitta is selling debt now that the markets are hot. Due to their floating rate pricing structure that protects investors from rising interest rates, leveraged loans are popular. Low-rated junk bonds perform better than other asset types due to their lower durations and credit-specific risks, which make them less correlated with interest rates.

More Bonds Coming Over the Next Few Years

Golden Nugget will also issue a $1.85-billion secured and a $1.85-billion unsecured bond over the next seven years. It will also establish a new $500-million revolving credit line. According to Bloomberg’s unidentified source, proceeds from the bond and loan sales will be used for refinancing existing debt.

Jefferies Financial Group Inc. is the lead on this loan deal, but a representative declined to comment. Golden Nugget’s representative did not immediately respond when we asked for a comment.

Multiple people familiar with the matter claimed that investors had already placed large orders for both loan and bond deals before the launch. The bond is expected to launch on Monday, and the price will go up on Thursday, they said.

The secured overnight financing rate is 400 basis points higher in the early pricing discussions. They said that the secured bond would yield approximately 4.5% over a seven-year period. The unsecured would yield approximately 6.25% over an eight-year period.

Golden Nugget has bonds worth $1.345 billion that will mature in 2024. Those come with a 6.75% interest rate. It also has $250 million in leveraged loans with a massive 15% interest rate. These were issued as COVID-19 grabbed ahold of the US gaming market, and are likely a target of the new bond sale.