Aurora, Illinois May Sell $58M in Bonds For Penn Casino Financing

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Posted on: January 26, 2024, 05:39h. 

Last updated on: January 29, 2024, 11:57h.

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Aurora, Ill., is mulling nan waste of $58 cardinal successful municipal bonds to travel up pinch its extremity of nan financing needed for Penn Entertainment’s (NASDAQ: PENN) planned Hollywood Casino successful nan city.

Hollywood Casino Aurora Penn EntertainmentAn artist’s rending of nan forthcoming $360 cardinal Hollywood Casino Aurora. The metropolis is expected to waste $58 cardinal successful bonds to beforehand nan project. (Image: Penn Entertainment)

Construction connected nan location casino commenced a mates of months agone and is tied to Illinois lawmakers signing disconnected connected riverboat casinos moving ashore, of which Hollywood Aurora was one.  That argumentation was approved successful 2019. In 2022, Penn announced plans to bring nan gaming venue to barren land.

At a gathering of nan Aurora City Council earlier this week, aldermen connected nan Finance Committee passed a parameters ordinance, which stipulates really proceeds from a enslaved waste will beryllium spent. Should nan afloat assembly o.k. that ordinance astatine a Feb. 13 meeting, nan metropolis could look to waste nan indebtedness earlier nan extremity of adjacent month.

Aurora sports an “AA” in installments standing — nan second-highest — pinch a “stable” outlook from S&P Global Ratings. Moody’s Investors Service rates immoderate of nan city’s gross and adaptable complaint request indebtedness “Aa3.” Those grades are acold higher than what’s recovered successful other Illinois casino towns, confirming Aurora’s financing costs for nan upcoming enslaved waste will apt beryllium low.

Why Aurora Bond Sale Is Necessary

Pennsylvania-based Penn Entertainment is building a $360 cardinal casino edifice adjacent I-88 successful Aurora, location to much than 179,000 people.

The enslaved waste is needed because nan metropolis fundamentally fronted Penn $50 cardinal to commencement nan project, pinch nan gaming institution agreeing to repay that sum via spot taxation payments. The repayment play is expected to beryllium up to 22 years, depending connected nan maturity day of nan bonds sold.

While nan indebtedness waste is needed to move nan casino task along, Aurora must support nan maturity day connected nan bonds it sells arsenic short arsenic possible. The logic is that longer-dated bonds transportation much liking complaint risk, and arsenic such, higher yields request to beryllium attached to those issuances to compensate investors for that risk.

The $58 cardinal rumor is needed truthful Aurora tin make nan first twelvemonth of payments while Hollywood Aurora is nether construction.

Total Cost Manageable for Aurora

Aurora’s main guidance officer, Chris Minick, told nan Chicago Tribune nan metropolis will apt salary $94 cardinal complete nan life of nan $58 indebtedness issuance, depending connected marketplace conditions. Aurora tin telephone nan bonds 8 to 10 years aft nan waste and settee nan indebtedness early.

Even if it is $94 cardinal that nan metropolis yet pays to marketplace those bonds, it’s apt a prudent investment. That’s because Hollywood Aurora is expected to beryllium a awesome contributor to metropolis coffers, and that goes beyond spot taxation payments.

Through nan first 10 months of 2023, nan casino was nan fourth-highest grossing successful nan state, indicating it’s an important driver of income and income taxation to Aurora and Illinois.

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