On Wednesday, Eldorado Resort Inc. (NASDAQ:ERI) launched a sale of high-yield bonds worth around $6 billion to finance the acquisition of Caesars Entertainment Corp.

Eldorado launches private placement through Colt Merger

The company is planning to issue senior notes of $3.08 billion that is expected to be due by 2025 with early pricing arrangement in the range of around  6%. Equally, the company is issuing secured senior notes of $1.875 billion of the senior notes due in 2027 at mid to high range of 8%. Similarly, the company is issuing five-year secured senior notes of an aggregate amount of $1.05 billion. The company is issuing the placement to individuals believed to be institutional investors as per Rule 144A under the 1933 Securities Act.

The company is offering the private senior notes through its wholly-owned subsidiary, Colt Merger Sub Inc. Proceeds from the offering will be put in Colt Merger pending satisfaction of regulatory conditions. JPMorgan Chase & Co has been appointed to lead the sale.  By Wednesday afternoon, two of the issued tranches had already reached $6 billion, with half of that discussed before the launch, according to sources.

Caesars to become a subsidiary of Eldorado

Proceeds from the sale of the notes will be used in financing the proposed acquisition of Caesars Entertainment Corp. Eldorado will acquire all the outstanding and issued securities of the Delaware based corporation. Following the acquisition, Colt Merger Sub will then merge with Caesars, after which it will remain as Caesars but as a subsidiary of Eldorado Resorts.

Recently following the COVID-19 pandemic, banks signed a financing commitment. Banks on the deal recently renegotiated better terms, giving them the flexibility to convert part of their debt into secured bonds. Eldorado recently launched a $1.47 billion Term B Loan to finance the acquisition with commitment deadline moved to June 19 from June 24.

On Wednesday, Moody’s Investor Service downgraded the company to B2, which is five levels below investment grade because of the increase in debt.

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