Jefferies & Co. will underwrite a $210 million eight-year issue of senior secured notes in a Rule 144A offering by Riviera Casinos, according to Duane Krohn, Riviera's treasurer. The issue, which will be used to take out notes maturing in '04 and '05, is expected to price early this week. A call toSteve Baker, a senior capital markets official at Jefferies, was referred to Tom Tarrant, a company spokesman, who declined comment.
One portfolio manager says he has not yet determined whether he will buy the issue, as he has yet to meet with Riviera Casinos officials. He says that while the company could be an acquisition target, the location of its Las Vegas property is not the best. One sell-side analyst notes that it is also an older property built in the 1950s, and has a poor design. He questions why the company would choose Jefferies as sole underwriter, arguing that it will have to pay a higher coupon as a result, because Jefferies will have trouble selling it. Krohn did not return a phone call seeking comment. The sell-side analyst says that while the company estimates that it will be making interest payments of 10.25% on the deal, he strongly doubts that it will price at that level.