Gaming | Gateway Casinos plans listing in $1.1 billion deal with leisure

Gateway Casinos & Entertainment Ltd., one of Canada’s largest gaming companies, has agreed to a deal that will create a new firm valued at about $1.1 billion including debt.
Gateway said Friday that Leisure Acquisition Corp., a special purpose company created to make acquisitions, will merge into a new unit of GTWY Holdings, Gateway’s parent. GTWY shares are expected to be listed on the New York Stock Exchange, according to a statement.
It’s the latest in a string of mergers in the fast-growing gaming industry aided by special purpose acquisition companies, or spacs, that let private companies raise money without an initial public offering. Earlier this month, sports-betting firm DraftKings Inc. agreed to be bought by a publicly traded acquisition fund that valued the new firm at about $3.3 billion.
Gateway, backed by private equity firm Catalyst Capital Group, has long sought to sell its shares. The Burnaby, British Columbia-based gaming company filed for a U.S. initial public offering in November 2018, expecting to raise about CAD400 million ($306 million) and valuing the company at as much as CAD2.5 billion, a person familiar with the matter said at the time. Gateway withdrew its IPO registration on Friday.
Toronto-based Catalyst was said to be weighing an IPO of Gateway in late 2015 before investor interest for new issuances in Canada dried up, people familiar with the matter said then. It also tried to take Gateway public in 2012 and also withdrew that IPO.
Gateway has 25 properties in British Columbia and Ontario, including the Starlight Casino near Vancouver that was named in a money laundering review last year for having permitted one gambler to convert CAD3.1 million, mostly in 20s bundled in plastic bags, into chips in 2010. The provincial government implemented new rules in 2018 requiring casinos to more tightly identify sources of funds brought in by patrons.
Gateway said the transaction with Leisure will be anchored by a $30 million private placement by gaming investor HG Vora Capital Management LLC, which has agreed to purchase 3 million shares of GTWY for $10 each, according to the statement.
Following the transaction, Marc J. Falcone, a Leisure director and a former banker at Goldman Sachs Group Inc. and Deutsche Bank Securities Inc., will become president and chief executive officer, replacing Gateway CEO Tony Santo, who will retire, according to the statement.
The deal is expected to close in the second quarter, Gateway said. Gateway and Leisure will host an investor call to discuss the transaction on Jan. 7, according to the statement. Natalie Obiko Pearson, Bloomberg