$625 million junk bond deal expected Thursday

Wednesday, Dec. 13, 2000 | 10:44 a.m.

PH Casino Resorts Inc., a subsidiary of Colony Capital of Los Angeles, is expected to price $625 million in high-yield bonds Thursday.

The bond deal will be used to finance a $1.3 billion takeover of Pinnacle Entertainment Inc. of Glendale, Calif., by Colony-controlled Harveys Casino Resorts of Lake Tahoe. PH Casino is attempting to price the 10-year senior notes to yield 11.5 percent to 11.75 percent.

The bond deal is being underwritten by Deutsche Banc Alex. Brown, Lehman Brothers and Bear Stearns.

Despite talk that the PH Casino offering could founder because of poor high-yield market conditions, high-yield gaming analyst Eric Matejevich of Merrill Lynch said he expects the deal to be successfully priced. Though the high-yield market has been down, Matejevich said conditions have been improving in the past two days.

"I think gaming has held its own, even in this down market," Matejevich said. "I think there's still appetite for gaming (debt) and quality management teams ... for an entity like PH Casino Resorts."

Matejevich also expects demand to come from current holders of Harveys debt, who he expects "will roll into the new deal."

Pinnacle owns and operates the Boomtown and Casino Magic casino chains, with three Mississippi properties, two in Louisiana, one in Indiana and one in Verdi, Nev.

The debt offering, if successful, would be the gaming industry's largest since MGM MIRAGE sold $850 million in investment grade notes Sept. 13.