Proceeds of Approximately $483 Million Unlocks Significant Value from a Portion of the Company’s Real Estate Portfolio
Gateway Well Positioned for Future Growth with Ample Liquidity, Robust Cash Flow and a Superior Consumer Driven Strategy
BURNABY, BC – March 12, 2018 – Gateway Casinos & Entertainment Limited (“Gateway“), one of the largest and most diversified gaming and entertainment companies in Canada, announced today the close of the previously announced sale and leaseback of real estate properties (the “Sale-Leaseback”) in the Greater Vancouver Regional District, including the Grand Villa Casino Burnaby, Starlight Casino New Westminster and Cascades Casino Langley. Total proceeds from the transaction exceeded $500 million, with net proceeds to Gateway estimated to be approximately $483 million.
Through its subsidiaries, Gateway continues to operate the three properties under leases with affiliates of the new landlord, Mesirow Realty Sale-Leaseback, and offers the same exceptional customer experience with no expected changes to employees or operations at these locations. Following this transaction, Gateway continues to hold a significant real estate portfolio and will evaluate opportunities to optimize its capital structure in and around its operations.
“This closing marks the largest financial transaction in our company’s recent history. We are committed to using the substantial resources of our company, including the additional liquidity unlocked today, to reduce debt and continue growing Gateway, for the benefit of all of our stakeholders,” said Tony Santo, Gateway’s Chief Executive Officer.
Gabriel de Alba, Gateway’s Executive Chairman, added, “This transaction proves that, in addition to a winning strategy and top-notch operations, Gateway has the discipline and expertise to take steps that can unlock value and contribute to our ability to drive long-term success. The fact that the sale-leaseback was conducted in coordination with a significant refinancing, debt reduction and return of capital to investors, is a testament to our efforts at value creation and reflects the strength of the company.”
Added de Alba, “Gateway is a premier operator in the gaming industry and continues to perform and excel across all metrics, operationally and financially. We look forward to continuing to drive this performance and maintaining a leadership position within the sector.”
Mesirow Financial’s Sale-Leaseback Capital group arranged for the purchase of the three Gateway properties. The acquisition financing was structured in collaboration with Mesirow Financial’s Credit Tenant Lease (CTL), as well as its Institutional Sales and Trading division.
Bennett Jones LLP and Latham & Watkins LLP served as legal counsel to Gateway. Colliers International, Capital Markets Group, also advised Gateway on the transaction.
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The Catalyst Capital Group Inc.:
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About Gateway Casinos & Entertainment:
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.
About Mesirow Financial:
Mesirow Financial is an independent, employee-owned firm founded in 1937. As specialists in investment, risk management and advisory services, we are committed to helping our institutional, corporate and individual clients achieve their objectives. Our professionals are inspired by an entrepreneurial desire to develop tailored solutions that deliver measurable results. To learn more, please visit mesirowfinancial.com.
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 include, without limitation, the estimated net proceeds from the Sale-Leaseback and the anticipated impact of the Sale-Leaseback. 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.