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| Lake Las Vegas |
Lake Las Vegas Joint Venture has benefited from strong investor demand with more than 80 accounts piling into a term loan backing a dividend to the owners Ron Boeddeker and Bass Holdings. Credit Suisse First Boston initially launched a $460 million bank deal to back a $398 million dividend, but this was increased by $100 million. "It was a huge success. They tightened pricing and increased the size despite the downgrade," said one banker, referring to Moody's Investors Service decision to downgrade the proposed first-and second-lien loans by one notch each. Originally pitched as a $360 million first lien and $100 million second lien, $75 million was added to the first lien and $25 million to the second lien, with the proceeds going straight to the dividend. Pricing was also cut on the first lien by 25 basis points to LIBOR plus 2 1/2% and the second lien pricing was slashed 50 bps to LIBOR plus 5 1/2%. The first-lien loan was trading in the grey market last week at 101 1/2-101 3/4 and the second lien was trading at 101 1/2-102 1/2. A Lake Las Vegas spokeswoman did not return calls. A CSFB banker declined comment.
Joseph Snider, a Moody's senior credit officer, explained that even though Lake Las Vegas began development in 1964 and the current owners took over in 1988, they did not have positive earnings until this year (LMW, 11/8). "Lake Las Vegas has reached the inflection point in its development cycle and should be in a position to harvest cash flows rather than continue to pour massive infrastructure spending into the community." The first lien is now rated B2 and the second lien is B3.
