Pricing on the deal to back the $455 million sale of Wembly PLC's U.S. gaming division to BLB Investors flexed down 25 basis points on the first lien and 50 basis points on the second lien. Merrill Lynch, Deutsche Bank and JPMorgan lead the loans.
Before the flex, the facility consisted of a five-year, $125 million revolver, a six-year, $245 million term loan "B" and a seven-year, $125 million second lien. Pricing on the revolver is LIBOR plus 2%, pricing on the term loan is LIBOR plus 2 1/4% and pricing on the second lien is LIBOR plus 3 3/4%.
Proceeds from the first and second-lien term loans fund the cash portion of BLB's acquisition, which includes the Lincoln Park racino in Rhode Island, three greyhound tracks and one horse racing track in Colorado. BLB is a joint venture between Starwood Capital Group Global, Waterford Group and Kerzner International. UTGR, a wholly owned subsidiary of BLB, will be the borrower. An individual close to the deal said, "It was an attractive market, a good opportunity and...it [was thought to] be a good deal for the three of the firms to work together on."
Len Wolman, chairman and ceo of the Waterford Group, explained that after Lincoln Park and two former Wembley executives were indicted on federal bribery charges, Rhode Island regulators suggested Wembley sell the property. The three investors had existing relationships --Waterford and Kerzner have been partners for over 10 years, most recently developing Mohegan Sun Casino, and Waterford has operated a number of Starwood hotels -- so when this opportunity arose, it was logical that the three groups partner. "We saw this opportunity come up and we think there is a lot of potential there," he explained. He said the property is in need of an upgrade, but has "a lot of unrealized potential." The deal has been in flux since the spring of 2004.
The company went through a bidding process, with a number of companies expressing interest, including Penn National Gaming and MGM Mirage, Wolman said. MGM put in an initial offer, which BLB topped, MGM countered and then BLB topped that.
Calls to Wembly were not returned. A spokesman for Starwood referred calls to Wolman. A spokesman for Kerzner declined comment.