Gateway Casinos Income Fund

Gateway Casinos Income Fund

October 25, 2006 17:24 ET

Gateway Casinos Income Fund Announces Closing of Syndicated Bank Financing for Casino Redevelopments Announced on May 1, 2006

BURNABY, BRITISH COLUMBIA--(CCNMatthews - Oct. 25, 2006) - Gateway Casinos Income Fund (the "Fund") (TSX:GCI.UN) is pleased to announce that its operating entity, the Gateway Casinos Limited Partnership (the "Partnership"), has closed the development financing announced on May 1, 2006. The Partnership has entered into an agreement with a syndicate of Canadian chartered banks, led by BMO Bank of Montreal and including Royal Bank of Canada and the Bank of Nova Scotia, to provide total debt financing of $220 million. Funds will be used to provide construction financing for the Burnaby redevelopment and the expansion / relocation of the Lake City Casinos in Kamloops, Kelowna and Vernon.

The total financing comprises a $30 million revolving credit facility, a $175 million committed construction facility and a $15 million committed contingency facility. The Fund believes that the new credit facilities will provide sufficient resources to finance the complete Burnaby redevelopment and the expansion / relocation of the Lake City Casinos in Kamloops, Kelowna and Vernon.

Interest on all of the facilities will be paid monthly in arrears and is based on the Partnership's ratio of debt to EBITDA for the period. Under the terms of the loan agreement, the Partnership's debt to Last Twelve Months (LTM) EBITDA ratio must not exceed certain thresholds. These thresholds start at a maximum of 3.75:1 and step down in increments of 0.25, reaching 2.5:1 by the end of the fourth quarter of 2010. Gateway must also maintain a fixed charge coverage ratio of not less than one to one, on a rolling four quarter basis. Additionally, the agreement requires that the amounts outstanding under the construction and contingency facilities be reduced by $70 million at substantial completion. Management is currently negotiating an increase in its long term note shelf facility to accommodate this requirement.

The revolving credit facility has a term of three years and requires interest only payments, while the committed construction and contingency facilities have three year terms commencing on the earlier of substantial completion of all the construction projects or August 31, 2008. During the construction period the Partnership is required to make interest-only payments after which principal becomes payable in monthly instalments equal to the amount of funds received from the FDF. Mandatory principal payments will cease once Gateway's debt to EBITDA ratio falls below 2.5:1.

The Fund will post a copy of the credit agreement on SEDAR, which will be available publicly on October 26, 2006.

About the Fund

The Fund is an unincorporated open-ended limited purpose trust established under the laws of British Columbia, which operates the Burnaby Casino and Cascades Casino in Greater Vancouver, B.C., the Palace Casino in Edmonton, Alberta and the Lake City Casinos in Kamloops, Kelowna, Penticton and Vernon, B.C. Headquartered in Burnaby, B.C., the Fund is one of the largest casino operators in Western Canada.

To find out more about Gateway Casinos Income Fund (TSX: GCI.UN), visit our website at

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