A bondholder group led by AIG Global Investments and Columbia Management Group is expected to announce a winning bidder for Hollywood Casino Shreveport, a Louisiana casino, in the coming weeks. Fixed-income investors took over control of the gaming company, a subsidiary of Penn National Gaming, after it was forced into default last year.
The sale could provide a lift to Hollywood Casino's $150 million 13% first mortgage notes of '06 and $39 million 13% senior secured notes of '06. Both classes were trading in the upper 70s last week according to one sell-side analyst after hitting lows in the low 60s over the year.
One sell-side analyst said potential bidders are reviewing the casino and the auction is going in the direction bondholders want, which is to find the highest bidder, and he said Penn National has been cooperating with the auction. He declined to mention specific suitors. Jane Pedreira, gaming analyst at Lehman Brothers in New York, said she does not expect investors to get back to par but predicted the securities could rise upon a successful sale.
Penn National, which had owned the Louisiana company last year before it defaulted and was turned over to bondholders, is seen as a likely bidder. One analyst said Penn may want to bid roughly $100 million, and while this would be far below the level another area casino recently sold for, re-acquisition by Penn National would be the most seamless, he said. A call to Bill Clifford, Penn National's cfo in Wyomissing, Pa., was referred to Joe Jaffoni, spokesman. He did not respond by press time. High-yield officials at AIG and Columbia declined to comment.
