Key Moments:
- Affinity Interactive has enlisted Moelis & Co. and Macquarie Group Ltd. to navigate increasing debt pressures
- Credit downgrades and a rise in debt-to-EBITDA from 7.8x in 2023 to about 11.7x in late 2024 have deepened concerns
- Bondholders are working with Akin Gump Strauss Hauer & Feld LLP as asset sales and restructuring options are evaluated
Strategic Advisors Engaged Amid Financial Pressures
Affinity Interactive, an established casino and media enterprise, is seeking expert guidance from Moelis & Co. in response to mounting debt issues and increasing demands from creditors. The decision marks a pivotal effort to stabilize its business and address waning bond values and rising leverage, signaling significant concern within the investor community.
Asset Sales and Legal Representation Considered
Confronted with investor wariness over possible debt restructuring and potential declines in bond value, several bondholders have retained Akin Gump Strauss Hauer & Feld LLP—a law firm with expertise in restructurings and Chapter 11 cases, as reported by Bloomberg sources. In parallel, Affinity Interactive has engaged Macquarie Group Ltd. to assess possible asset sales, with discussions reportedly focused on real estate holdings and digital gaming assets such as its Daily Racing Form brand. Earlier asset divestment attempts did not lead to successful transactions, amplifying the urgency of the company’s current initiatives.
Market Concerns Reflected in Bond Prices
Market sentiment mirrors the company’s challenges: Affinity’s senior secured notes due in 2027 have been trading at less than 50% of their face value, reflecting serious doubt about its financial outlook. Analysts have suggested that Affinity’s options are growing limited as it weighs operational requirements against the need to repay debt and meet investor expectations.
| Key Financial Metrics | Value |
|---|---|
| Debt-to-EBITDA (2023) | 7.8x |
| Debt-to-EBITDA (late 2024) | ~11.7x |
| Senior Secured Notes Due 2027 | Trading below 50% of face value |
Credit Downgrades Highlight Mounting Risks
Credit agencies have also underscored the tough road ahead: Moody’s downgraded Affinity’s rating to Caa1 in April, while S&P Global Ratings moved it to CCC+, citing increased expenses and declining earnings. The notable rise in the company’s debt-to-EBITDA ratio further raised questions about both its ability to service debt and retain operational flexibility.
Asset Sales Underscore Capital Pressure
Affinity Interactive, a portfolio company of Z Capital Group’s private equity division, operates several regional casinos including Silver Sevens in Las Vegas, Primm Valley Resort & Casino, and Buffalo Bill’s in Primm, Nevada. The recent sale of Rail City Casino in Sparks, Nevada, reduced revenues and further emphasized the company’s capital needs.
Uncertain Path Forward
Observers within the gaming industry see Affinity’s moves to hire bankers and legal advisers, alongside ongoing asset sale deliberations, as emblematic of the growing difficulties faced by mid-sized regional casino players. A saturated and costly market, combined with deeply discounted debt, has effectively closed off refinancing as a viable solution. Decisions made by Affinity regarding potential restructuring or a renewed operational focus could prove decisive for its future.
Stakeholders across the board—including investors, lenders, and employees—are following developments closely. Affinity’s choices in the realms of asset divestiture, creditor discussions, and any restructuring could serve as a bellwether for other regional gaming companies confronting similar market obstacles.
- Author
Daniel Williams
