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Russian Gambling Chain Raises $45 Million

RUSSIA -- Ritzio Entertainment Group, which runs a gambling chain in Russia, said it raised $45 million to refinance existing debt and buy new slot machines after a sale of notes linked to its credit.

The company received the money as a one-year loan from Dresdner Bank AG, which Moscow-based MDM Bank then bought and later sold as bonds to mainly Western investors, said Andrey Dobrynin, director for international capital markets at MDM.

"We purchased the notes from Dresdner and sold them to our investor base," Dobrynin said. "Investors purchased the whole issue."

Credit-linked notes typically offer a higher yield than bonds of similar maturity on condition investors accept a lower return if a specified event takes place. Dresdner, which retains the so-called settlement risk, will redeem the bonds only if Ritzio pays off the loan, Dobrynin said.

The notes have a 12.75 percent coupon and will mature on Dec. 23, 2005. U.S. and U.K. based investors bought more than half the securities, MDM and Ritzio said in a joint e-mailed statement.

The company has about $50 million of debt maturing next year and plans to use the proceeds from the sale to pay off the debt. Money left over will be used to purchase slot machines, Dobrynin said. The notes represent the first by a company in the gaming industry.

Copyright © Las Vegas Sun. Inc. Republished with permission.

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