Gateway Casinos & Entertainment Announces Successful Consent Solicitation with Respect to 8.250% Second Priority Senior Secured Notes Due 2024

New Term Loan ‘B’ Upsized to US$335M and Successfully Priced, with Strong Support from Major Banks

BURNABY, British Columbia--()--Gateway Casinos & Entertainment Limited ("Gateway") announced today that it has successfully received consents from holders of more than a majority in aggregate principal amount of the outstanding 8.250% Second Priority Senior Secured Notes due 2024 (the "Notes") to approve certain proposed amendments (the "Proposed Amendments") to the indenture governing the Notes (the "Indenture"), which Gateway requested pursuant to its previously announced consent solicitation (the "Consent Solicitation"). The Consent Solicitation expired at 5:00 p.m., New York City time, on March 8, 2018.

“Not only are both transactions a vote of confidence in Gateway’s future, they lower our cost of capital and provide significant liquidity to invest in growth and drive value for all our stakeholders.”

Following the satisfaction of the other conditions thereto, Gateway and the trustees will execute a supplemental indenture to the Indenture incorporating the Proposed Amendments. While the supplemental indenture to the Indenture will become effective upon execution, the Proposed Amendments will not become operative unless the applicable consent fee is paid.

Additionally, Gateway agreed with a syndicate of lenders for a first lien secured term loan facility (the “Term Loan B”), as part of the previously proposed senior secured credit facility (the “2018 Senior Secured Credit Facility”). Morgan Stanley Senior Funding, Inc., SunTrust Robinson Humphrey, Inc., BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC, Goldman Sachs Lending Partners LLC, Macquarie Capital (USA) Inc., National Bank of Canada, Canadian Imperial Bank of Commerce and ING Capital LLC acted as bookrunners of the transaction. The Term Loan B was upsized by US$30M to US$335M and successfully priced at an original issue discount of 99.875% of par value, bearing interest at a per annum rate equal to the London Interbank Offered Rate, or LIBOR, plus 3.00%. The loan terms were more favorable than initial indications of LIBOR plus 3.25% at an OID of 99.75% of par value.

“We’re very pleased by the success of the consent solicitation and the strong support for our refinancing, which allowed for a reduction in the rate we initially offered the market and a 75 basis point reduction in borrowing costs,” said Gabriel de Alba, Executive Chairman of Gateway. “Not only are both transactions a vote of confidence in Gateway’s future, they lower our cost of capital and provide significant liquidity to invest in growth and drive value for all our stakeholders.”

The closing of the 2018 Senior Secured Credit Facility is expected to occur on or about March 13, 2018 and is subject to customary closing conditions. The anticipated proceeds are expected to be used to (i) refinance the remaining commitments and loans under Gateway’s existing senior secured credit facility after giving effect to the repayment of the existing loans using the proceeds of the Company's previously announced sale-leaseback transaction; (ii) complete a return of capital, dividend or other similar distribution of approximately US$100 million; (iii) fund general corporate purposes (including capital expenditures); (iv) repay in full the mortgage on the Cascades Casino Langley; and (v) pay related fees and expenses incurred in connection with the foregoing.

The complete terms and conditions of the Consent Solicitation are set forth in the Consent Solicitation Statement, dated February 26, 2018, as amended on March 6, 2018 (the "Consent Solicitation Statement"), which was sent to all holders of record of the Notes as of the record date.

Morgan Stanley & Co. LLC served as the Solicitation Agent in connection with the Consent Solicitation. Any persons with questions concerning the Consent Solicitation should contact Morgan Stanley & Co. LLC at +1 212-761-1057 (collect) or +1 800-624-1808 (toll-free).

Copies of the Consent Solicitation Statement and other related documents may be obtained from D.F. King & Co, Inc., the Information, Tabulation and Paying Agent, via email at gateway@dfking.com or via phone at +1 866-796-6867.

About Gateway Casinos and Entertainment Limited:

Gateway is one of the largest and most diversified gaming and entertainment companies in Canada. Operating in British Columbia, Edmonton and Ontario, Gateway has 6,000 employees and operates 25 gaming properties with 282 tables, over 9,500 slots, 68 restaurants and bars and 272 hotel rooms. As the selected service provider in Southwestern and Northern Ontario, Gateway will undertake two new planned builds in North Bay and Kenora. Gateway is undertaking an ambitious growth strategy to dramatically improve the customer experience and attract new customers. This includes the development of proprietary casino and food and beverage brands like Match Eatery & Public House and Atlas Steak + Fish. In 2017, Gateway celebrated 25 years in the business of gaming and entertainment in Canada. Further information is available at www.gatewaycasinos.com.

About The Catalyst Capital Group Inc.:

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.

Forward-Looking Statements:

This press release may contain "forward-looking statements" within the meaning of applicable securities laws in the United States and in Canada. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Gateway undertakes no obligation to update or revise any forward-looking statement after the date on which it is made, whether as a result of new information, future events or otherwise, except to the extent required by law.

Contacts

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

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Release Summary

Gateway Casinos & Entertainment Announces Successful Consent Solicitation