Last week, Fitch Ratings awarded its final rating to the Great Canadian Gaming Corporation. The gaming conglomerate that was recently acquired by Apollo Global Management has received a final Long-Term Issuer Default Rating of ‘B+’. Additionally, the company has received a ‘BB+’/’RR1’ final rating to its US$930 million senior secured credit facility and US$350 million senior secured notes.
Great Canadian Gaming Corporation is an Ontario-based firm that was established in 1982, which owns and operates several gaming properties across Canada. Currently, the company oversees 26 casinos across the country, with facilities in Ontario, British Columbia, New Brunswick, and Nova Scotia. Its casinos have become a preferred location for many gamblers across the country due to their premium amenities and offerings.
Fitch Ratings’ score considers the gaming company’s modest rent-adjusted leverage, with a pro-rata share of joint venture debt upon the recovery of the country’s gaming industry, and contributions from its development pipeline. The long-term leverage profile is less certain having in mind the lack of constraints and the potential recapitalization of the Greater Toronto Area JV bundle during the rating period.
The rating is also based on the company’s casino properties that have and will continue to generate durable cash flow from their strong positions and exclusivity. The company managed to reopen its gaming properties in Canada in Q3 of 2021. Fitch Ratings projects that the corporation’s properties will be able to fully recover from the unprecedented situation by 2022, which is slightly slower than the US casinos.
Fitch Ratings also evaluates the company’s adjusted leverage will reach the low-6.0x range in 2022 and it should improve to 5.0x by 2023 and 2024 after GTA JV’s expansion and local gaming returns to normality. The assessment also states that the gaming conglomerate has a favorable position and economic exclusivity thanks to its existing agreements in the country.
Great Canadian Gaming Corporation oversees a total of 26 across several Canadian provinces, and despite being the largest commercial operator in the country it is concentrated in Ontario and B.C. The two provinces compile 52% and 40% respectively of the company’s pre-virus earnings. The company has a favorable competitive position in both provinces allowing it with more limited diversification compared to its US gaming peers.
Also, it is worth mentioning is that last week the gaming operator was officially acquired by Apollo Global Management and the company appointed a brand-new CEO. Now, gaming expert Antony Rodio will take over the position with immediate effect. Interim CEO of the company Terrance Doyle will be now transferred to the role of National President of Business Development.
The acquisition of the gaming operator became official on September 23, 2021, as the company received all regulatory approvals for the deal. According to section 288 of the Business Corporation Act of B.C., the corporation’s common share can be acquired by Raptor Acquisition Corp. for the price of CA$45 in cash per share. Now, the firm heads to its next chapter of existence.
Source: “Fitch Assigns Final Rating of ‘B+’ to Great Canadian Gaming Corp.; Outlook Stable”, Fitch Ratings, September 24, 2021