Blackstone, Macquarie bet on $4.9bn buyout

Private lenders GSO Capital Partners and Macquarie Capital have part-financed the acquisition of Rational Group, which owns PokerStars and Full Tilt Poker.

Two private debt lenders provided partial financing to the $4.9 billion cash acquisition of the world’s largest poker business, according to a statement released on Thursday.

Blackstone Group credit affiliate GSO Capital Partners and alternative lender Macquarie Capital will participate with Deutsche Bank and Barclays Bank in Amaya Gaming Group's buyout of the Isle of Man-based parent of the Rational Group, set up 14 years ago by online gaming pioneer and chief executive Mark Scheinberg.

The transaction will be financed through a combination of cash on hand, new debt and private placement of shares.

Proceeds will be used to purchase 100 percent of the issued and outstanding shares of the Oldford Group in an all-cash transaction and will result in Quebec-based Amaya becoming the world’s largest publicly-traded online gaming company.

Affiliates of GSO have agreed to participate in the debt financing, to subscribe for $600 million in convertible preferred shares, and to purchase $55 million of common shares priced at approximately $20 upon closing.

Additionally, an unnamed investment manager, on behalf of its clients, has agreed to participate in the debt financing, to subscribe for approximately $270 million in convertible preferred shares, and to purchase approximately $55 million of subscription receipts.

Financing will be comprised of $2.1 billion senior secured credit facilities, consisting of a $2.0 billion first lien term loan and a $100 million revolving credit facility fully underwritten by Deutsche Bank, Barclays Bank and Macquarie Capital. An $800 million senior secured second lien term loan will be fully underwritten by Deutsche Bank, Barclays, and Macquarie Capital, with participation from GSO and the investment manager. The remainder of the purchase price will be raised via a combination of shares and cash.

Before the transaction was announced, Bloomberg reported that GSO would contribute more than $1 billion to the transaction across three funds, making it the credit affiliate’s biggest deal to date. Amaya is an existing client of GSO.

“For calendar year 2013, pro forma combined revenue, EBITDA and adjusted EBITDA1 of Amaya and Oldford Group were $1.3 billion, $474.8 million and $473.8 million, respectively,” according to the statement. 

Rational Group owns online poker platforms PokerStars and Full Tilt Poker, which are collectively the world’s most profitable online poker brands. The platforms engage with more than 85 million registered players on desktop and mobile devices. 

David Baazov, chief executive of Amaya, said: “This is a transformative acquisition for Amaya, strengthening our core B2B operations with a consumer online powerhouse that creates a scalable global platform for growth. Mark Scheinberg pioneered the online poker industry, building a remarkable business and earning the trust of millions of poker players by delivering the industry’s best game experiences, customer service and online security. Working with the experienced executive team at Rational Group, Amaya will continue that tradition of excellence and accelerate growth into new markets and verticals.” 

Scheinberg will depart the company upon completion of the deal, the statement said.

Deutsche Bank Securities and Canaccord Genuity are acting as lead financial advisors to Amaya. Macquarie and Barclays acted as co-advisors. Houlihan Lokey acted as financial advisor to the Oldford Group.