Boyd Gaming Corp. has yet to decide the lead banks and structure on the financing backing its $1.3 billion merger with Coast Casinos. The company has a host of relationship banks, including Deutsche Bank andCIBC World Markets, where Boyd's senior v.p. and treasurer worked until three weeks ago. "CIBC is the lead for Boyd right now on the bank side and obviously I've worked with them closely for years," said Paul Chakmak, who joined from CIBC three weeks ago. "But I have a lot other relationships out there from friendly competition over the years. I enjoy knowing so many different people in the finance industry and we'll just do what's best for Boyd."
Chakmak said the leads on both the bank and bond deal as well as the structure will all be decided in the next 30 days. He said he expects Boyd will spend most of its time talking with its existing leads, as opposed to other lenders that might want to jump in. Deutsche Bank advised Boyd on the transaction while Bank of America advised Coast. "We certainly expect Deutsche Bank to have a big role in the deal," Chakmak said. "Deutsche Bank has always had a close working relationship with Boyd. Though we haven't used them from an M&A perspective." CIBC is the lead on Boyd's current credit facility and the company has also worked with Wells Fargo and B of A in the past, Chakmak noted. B of A is the lead on Coast's current debt, Chakmak noted.
Chakmak was a managing director at CIBC, where he worked for 17 years, and he had covered Boyd since 1990. Chakmak said the timing of his hire is not related to the merger.
Boyd expects to fund the merger with a combination of a new bank facility and issuance of notes in the public market, noted Ellis Landau, Boyd's cfo, during a conference call. Boyd currently has a $500 million credit facility that comprises a $400 million revolver and $100 million "B" loan. Coast currently has $460 million of outstanding debt, which comprises a $135 million bank facility and $325 million of 912% subordinated notes callable in April. "It's very clear that the Coast bank facility as well as the $325 million notes and Boyd facilities will all be refinanced as part of the package," Chakmak said. He declined to speculate on expected pricing on the deal.
Boyd also recently announced that it will acquire Harrah's Entertainment's Shreveport hotel-casino for $190 million. The Shreveport deal will close at least 60 days prior to the Coast merger. "We'll look to finance that most likely through the existing bank deal," Chakmak said.