Ameristar Rides Improved Debt Ratios To Lower Borrowing Costs

  • 30 Jun 2002
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Ameristar Casino has amended its credit facility to secure lower borrowing costs. The Las Vegas-based gaming company was looking to bring its interest costs in line with the market and a peer group with comparable credit numbers, according to Thomas Steinbauer, cfo. The company was able to obtain the better pricing because of an improved credit profile, he said, noting that Ameristar's debt-to-EBITDA multiple has decreased from 5.15 times to 4.15 times and its senior debt-to-EBIDTA ratio has decreased from 3 times to 2 times. The company was able to lower its leverage ratios through a combination of increased operating cash flow and debt reduction using $95 million of the proceeds from a November 2001 equity offering.

The amended deal now comprises two $75 million revolvers, one with a term-out option, and a five-year term loan "A" of just less than $50 million. All three tranches are priced at LIBOR plus 23/ 4%. A six-year, $191.5 million term loan "B" is priced at LIBOR plus 3%. Under the old agreement, the company's pro-rata portion was priced at LIBOR plus 31/ 4%, the "B" loan was set at LIBOR plus 33/ 4% and a "C" term loan was priced at LIBOR plus 4%. The former $103.1 million "B" tranche and $88.4 million "C" tranche were rolled into one term loan so that the lower interest rate applied to the "B" piece would also cover borrowings under the former "C" loan.

Ameristar approached its bank group, which is led by Deutsche Bank and Wells Fargo, to request the amendment, Steinbauer noted, adding that the two banks lead the facility because of their strong relationships with the company. "They stepped up to the plate to provide us with funding for a key acquisition," he said, referring to the company's acquisition of two Missouri casino properties.

  • 30 Jun 2002

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3 Goldman Sachs 1,392 3 13.15
4 Barclays 1,097 2 10.37
5 Morgan Stanley 1,094 2 10.34

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5 Barclays 12,632.86 43 7.09%