Las Vegas hotel and casino operator Station Casinos recently sold $400 million of 7.75%, 10-year senior notes to pay down its revolving credit facility in advance of major development projects over the next few years.
The company, with a $3.4 billion market cap, initially planned to sell $300 million, but increased the offering because of investor interest, said Glenn Christenson, cfo. "We felt it appropriate to get more capital. It allows us more flexibility going forward," he said. Station's development projects are in the planning stages and have not been unveiled, he added.
As of July 31, the company had borrowed approximately $1.2 billion at an interest rate of 7% under the revolver, which matures in 2010. All of the borrowings were used to repurchase shares of common stock sold by the company's board of directors. Station purchased 10.1 million shares of its common stock from Jan. 1 through June 30 for approximately $737 million. In July, the company purchased an additional 900,000 shares for approximately $50.6 million. Christenson said the company repurchased the shares because the business and its market are rapidly expanding. In total, the company has $3.2 billion in outstanding debt.
Christenson said recent discussions with the company's bankers about its capital structure led to the offering. Banc of America Securities, Deutsche Bank and Wachovia Securities were joint bookrunning managers. Wells Fargo, RBS Greenwich Capital, Calyon Securities, Commerzbank, JPMorgan, Scotia Capital and Goldman Sachs were co-managers. Station has a 30-year relationship with BofA and long-standing relationships with each of the other banks. All of the banks also participate in Station's credit facility.