Gateway Casinos Announces Successful Refinancing to Support Growth

Lower Cost and Flexible Capital Structure Supports Acquisition Financing and Allows for Significant Investment Throughout the Gateway Portfolio

BURNABY, British Columbia--()--Gateway Casinos & Entertainment Limited (“Gateway” or “Company”) announced today that it has completed the previously announced transactions for the purpose of refinancing its existing credit facilities and securing a new capital structure to support the Company’s growth initiatives. The new structure includes a C$125 million senior secured revolving credit facility, a senior secured term loan facility comprising a US$405 million tranche and C$80 million tranche (together, the “New Senior Secured Credit Facility”) and US$255 million of second priority senior secured notes due 2024 (the “New Notes”). In addition, the New Senior Secured Credit Facility was increased by US$25 million from its original target as a result of strong investor demand. Gateway’s cost of capital has been reduced with this transaction while obtaining financial flexibility and long-term maturities.

“Gateway is well positioned for continued development and growth across its platform of operations and we look forward to bringing our unique brands and experiences to Ontario”

As part of the transaction, Gateway has (i) repaid all outstanding amounts under the Company’s existing senior secured credit facility, (ii) redeemed Gateway’s outstanding 8.50% Second Priority Senior Secured Notes due 2020 in the aggregate principal amount of C$200 million (the "Existing Notes"), (iii) financed the acquisitions from the Ontario Lottery and Gaming Corporation of certain gaming properties in Ontario (the “Ontario Acquisitions”) , which are expected to be completed in the second quarter of 2017, and (iv) distributed US$100 million to shareholders. The Ontario Acquisitions are expected to be immediately accretive to Gateway’s top-line growth, EBITDA margin and full year earnings. The use of proceeds will also include funding new developments and ongoing operations in Western Canada.

“Gateway is well positioned for continued development and growth across its platform of operations and we look forward to bringing our unique brands and experiences to Ontario,” said Tony Santo, Gateway’s Chief Executive Officer. “Gateway has a great portfolio that represents a higher standard for gaming and entertainment in the industry. Upon completion, the Ontario acquisitions are expected to be immediately accretive to Gateway’s revenue, EBITDA and earnings, giving us additional capacity to invest in the businesses while reducing leverage over time. We are very excited about the future of Gateway as a business, employer and community stakeholder.”

“We are very pleased with the successful refinancing of the company, which was significantly oversubscribed and completed at a lower cost of capital and with flexible terms,” said Gabriel de Alba, Gateway’s Executive Chairman. “The new credit facilities acknowledge Gateway’s financial strength and the growth potential of the business, including the recent Ontario Acquisitions and current and new operations in Western Canada.”

The transactions were executed by a syndicate of investment banks led by Morgan Stanley, and included SunTrust Robinson Humphrey, BMO Capital Markets, Macquarie Capital, CIBC Capital Markets, National Bank of Canada Financial Markets and ING.

About Gateway Casinos & Entertainment

Gateway Casinos & Entertainment Limited (Gateway) is one of the largest and most diversified gaming companies in Canada. Operating in Western Canada, Gateway has over 4,100 employees and operates 18 gaming properties with 222 tables and over 6,700 slot machines. With business partners, Gateway operates 43 restaurants and 1,000 hotel rooms. Gateway is undertaking an exciting redevelopment strategy to dramatically improve the customer experience and attract new gaming customers. This includes the development of proprietary food and beverage offerings like Match Eatery & Public House and Atlas Steak + Fish. Gateway is the selected service provider in Northern and Southwestern Ontario which will bring 9 properties and two new planned builds to the Gateway portfolio when fully implemented. In 2017, Gateway will celebrate 25 years in the business of gaming and entertainment in Canada. Further information is available at www.gatewaycasinos.com.

About The Catalyst Capital Group

The Catalyst Capital Group Inc., a private equity investment firm with more than $6 billion in assets under management founded in 2002, is a leader in operationally focused turnaround investing. The firm's mandate is to manufacture risk adjusted returns, in keeping with its philosophy of "we buy what we can build." Catalyst's Guiding Principles of investment excellence through operational involvement, superior analytics, attention to detail, intellectual curiosity, team and reputation are key to the firm's success. The Catalyst team collectively possesses more than 110 years of extensive experience in restructuring, credit markets and merchant and investment banking in Canada, the United States, Latin America and Europe.

Contacts

Gateway:
Carrie Kormos, +1-416-456-5606
Senior Vice President, Marketing and Communications
ckormos@gatewaycasinos.com
or
Catalyst Capital Group:
Gagnier Communications
Dan Gagnier, +1-646-569-5897
dg@gagnierfc.com

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Gateway Casinos Announces Successful Refinancing to Support Growth

Gateway Casinos & Entertainment Limited