Scientific Games Corporation (NASDAQ: SGMS) (“Scientific Games” or the “Company”) announced today that its indirect wholly owned subsidiary, SGMS Escrow Corp. (“SGE”), priced $3.15 billion in aggregate principal amount of new senior notes in its previously announced private offering in conjunction with the Company’s pending acquisition (the “Bally Acquisition”) of Bally Technologies, Inc. (NYSE: BYI) (“Bally”). The new senior notes will consist of:
$950 million in aggregate principal amount of 7.0% senior secured notes due January 1, 2022, (the “Secured Notes”); and
$2,200 million in aggregate principal amount of 10.0% senior unsecured notes due December 1, 2022 (the “Unsecured Notes,” and together with the Secured Notes, the “Notes”).
The Company will receive approximately $933 million in net proceeds from the issuance of the Secured Notes and $2,156 million in net proceeds from the issuance of the Unsecured Notes.
Scientific Games intends to use the net proceeds of the Notes offering, together with its and Bally’s cash, $2,000 million of incremental term loans under the previously disclosed escrow credit agreement and $200 million of borrowings under Scientific Games’ revolving credit facility, to finance the Bally Acquisition, including the refinancing of approximately $1.9 billion of Bally debt and the payment of fees and expenses related to the Bally Acquisition and the financing transactions. Upon the closing of the Notes offering, all of the financing required in connection with the Bally Acquisition will have been completed.
The Notes offering is currently expected to close on November 21, 2014. Promptly following the closing of the Bally Acquisition, SGE will merge with and into Scientific Games International, Inc. (“SGI”), with SGI as the surviving entity and assuming all of SGE’s obligations under the Notes and the incremental term loans (which will become incremental term loans under SGI’s amended credit agreement, as previously disclosed), and the Notes and the incremental term loans will be guaranteed by Scientific Games and certain of its subsidiaries.
Completion of the Bally Acquisition is subject to approval by Bally’s stockholders, receipt of certain gaming regulatory approvals and other customary closing conditions.
The Notes and the related guarantees will not be registered under the Securities Act of 1933 (the “Securities Act”) or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Notes and the related guarantees will be offered only to qualified institutional buyers in accordance with Rule 144A and to non-U.S. Persons under Regulation S under the Securities Act.
This press release does not and will not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor will there be any sale of the Notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.