Affinity Interactive Seeks Financial Guidance Amid Mounting Debt Concerns
Affinity Interactive, a casino and media company, is partnering with the investment bank Moelis & Co. to engage in discussions with its bondholders in an effort to address its escalating debt challenges. This initiative reflects the company’s strategy to stabilize its financial position amid growing creditor unease over increasing debt levels.
Bondholders Seek Legal Assistance as Debt Concerns Grow
Several bondholders have reportedly enlisted the services of the law firm Akin Gump Strauss Hauer & Feld LLP, which specializes in corporate restructuring and Chapter 11 bankruptcy cases. These investors are apprehensive about Affinity’s financial outlook and the possibility that any debt restructuring deal could reduce the value of their current bonds.
In addition to collaborating with Moelis, Affinity Interactive has engaged Macquarie Group Ltd. to explore potential asset sales. The company is considering divesting properties, potentially including real estate holdings and its digital gaming assets such as its media outlet Daily Racing Form. These efforts follow earlier unsuccessful attempts to sell certain assets.
Over the past year, Affinity’s financial situation has deteriorated significantly. Market data indicates that its senior secured notes, maturing in 2027, are now trading at less than half of their original face value.
Credit Agencies Raise Concerns Over Increasing Debt and Reduced Financial Flexibility
Credit rating agencies have acknowledged Affinity Interactive’s mounting financial strain. In April, Moody’s downgraded the company’s credit rating to Caa1, while S&P Global Ratings lowered it to CCC+, citing decreases in earnings alongside rising costs. Analysts highlight that Affinity’s debt-to-EBITDA ratio has surged from 7.8 times in 2023 to approximately 11.7 times forecasted in late 2024, signaling worsening leverage.
Affinity Interactive, which is owned by the private equity arm of Z Capital Group, operates multiple casinos across Nevada, Iowa, and Missouri. Its portfolio includes notable properties such as Silver Sevens Hotel & Casino in Las Vegas, Primm Valley Resort & Casino, and Buffalo Bill’s in Primm.
To raise cash, the company recently sold the Rail City Casino located in Sparks, Nevada, a transaction that has reduced its income base. Industry experts view Affinity’s exploration of asset sales or restructuring plans as indicative of the challenges mid-sized regional operators are facing in a highly competitive and capital-intensive market.
With Affinity’s debt trading at depressed levels and limited refinancing options available, the company’s next steps will be crucial. It may choose to pursue a structured debt restructuring or implement significant operational changes to restore financial health and stability.
