Pinnacle Entertainment announced plans Monday to raise up to $800 million in new debt to help the company complete its buyout of regional gaming rival Ameristar Casinos.
In separate announcements, Las Vegas-based Pinnacle said it was seeking commitments for a $1.6 billion term loan and a $1 billion revolving credit agreement, along with the sale of $800 million in bonds.
The new debt would be used to pay off $450 million in debt due in 2017 and also to help finance the $2.8 billion acquisition the company hopes to finalize this fall.
The debt offering is scheduled to be completed prior to the sale closing.
“Pinnacle is moving forward with consummating its acquisition of Ameristar,” Union Gaming Group managing director Bill Lerner said.
Deutsche Bank gaming analyst Andrew Zarnett said Pinnacle’s debt will be about $4 billion once the Ameristar purchase is closed. Pinnacle is paying Ameristar stockholders $26.50 per share and assuming $1.9 billion of the company’s debt.
“Although this is a levering event in the near term, we believe that the combined entity will generate substantial free cash flow and synergies that will help reduce debt on the balance sheet over the longer term,” Zarnett told investors.
Pinnacle will control 17 gaming properties after completion of the buyout, which has been approved by several state gaming regulatory bodies, including Nevada.
Pinnacle currently owns casinos in Louisiana, Missouri and Indiana and racetracks in Ohio and Texas.
Ameristar has eight properties in Missouri, Iowa, Colorado, Mississippi and Indiana and two in Northern Nevada.
In May, Pinnacle reached an agreement with the Federal Trade Commission to sell the Lumiere Place in St. Louis and Ameristar’s planned $580 million casino development project in Lake Charles, La., to avoid violation of any U.S. antitrust laws.
It’s unclear when the sales of the casinos would take place.
Shares of Pinnacle closed Monday at $20.24 on the New York Stock Exchange, down 15 cents, or 0.74 percent.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.