Bank of America and Wells Fargo Bank increased their commitments on Harrah's Operating Co.'s recently amended $4 billion credit facility after a lender dropped out of the syndicate and two banks reduced their commitments by a total of $150 million. Jonathan Halkyard, senior v.p. and treasurer, said he had asked B of A and Wells Fargo, which lead the facility, to increase their commitments in case lenders did not agree with the new price cut on the credit line. Pricing was cut to LIBOR plus 62.5 basis points from LIBOR plus 87.5 basis points. Both banks increased their commitments to $350 million from $275 million.
Halkyard named Oak Brook Bank as the bank that chose not to participate in the amended facility. George Clam, vice-chairman, said it chose to withdraw from the deal because it was not comfortable with the price cut. "We felt there was probably a better way to deploy our capital," said Clam. He added that the syndicated loan market is becoming less attractive because of the large number of recent repricings. "There are more and more restructurings, which have led to more aggressive pricing," he said. Clam said the company prefers to lend directly to middle-market customers because the pricing is less aggressive than in the large syndicated deals.
Halkyard said the casino operator sought lower pricing because it was paying a rate more than that of its peers. "The pricing was a little above the market. We wanted to bring it into line," he said. He added that B of A kept the company updated on what the rest of the market was paying. "It became apparent last September what we could get," said Halkyard, commenting on the lower interest rate environment. The company also extended the maturity on its revolver to 2011 from 2009. Ameristar Casinos is another gaming company that entered a credit facility in November that offered cheaper pricing. The credit line consists of an $800 million revolver priced at LIBOR plus 1% and a $400 million term loan priced at LIBOR plus 1 1/2%.
National Association was also a joint lead and joint bookrunner on the facility. Deutsche Bank was syndication agent and Citigroup, JPMorgan, Wells Fargo and The Royal Bank of Scotland were co-documentation agents.