Churchill Downs Incorporated, operator of the Kentucky Derby, announced on September 14, 2026, the launch of a proposed $500 million senior secured Term Loan B due 2033. The company, trading on Nasdaq as CHDN, intends to use the net proceeds from this new loan to repay outstanding Term Loan B loans, partially redeem its 5.50% Senior Notes due 2027, cover related transaction fees and expenses, and for working capital and other general corporate purposes. This move comes as the company continues to focus on its core horse racing business, especially after a record-breaking Kentucky Derby Week in 2026.
The proposed 2033 TLB is subject to various conditions, including market and customary conditions, as well as gaming regulatory approvals. Churchill Downs has cautioned that there are no assurances that its marketing efforts will be successful or that it will be able to obtain the loan as planned. The announcement also clarified that this press release is not a notice of redemption for the 2027 Notes.
The company has recently posted strong financial results, with a record net revenue of $980 million in the second quarter, representing a 5% year-over-year increase. Its live and historical racing segment saw a $34 million revenue increase year-over-year, with $21 million specifically attributed to its Louisville racetrack due to a record-breaking Derby Week. Despite these gains, Churchill Downs has been considering selling some of its regional gaming properties to focus on its more profitable and less capital-intensive horse racing segment, which boasts 55% margins and low double-digit growth. This strategic pivot aims to improve the company's share price performance, which management believes has not accurately reflected the company's underlying value.
The decision to potentially divest regional gaming properties, such as Calder Casino in Florida and Terre Haute Casino Resort in Indiana, is part of a broader strategy to rebalance its portfolio. While past casino acquisitions provided necessary cash flow for expansion into historical racing machines and TwinSpires technology, management now sees a shift towards leveraging the unique regulatory moats in the HRM market. The company owns Exacta Systems, a dominant technology provider for HRMs, giving it a strong competitive advantage in this sector. This refinancing effort aligns with their stated goal of repaying debt and focusing on high-growth areas within horse racing.
