Boyd Gaming Corp. has increased its revolver by $250 million to $1.35 billion and cut the pricing by 25 basis points in a deal led by Bank of America, CIBC World Markets and Wells Fargo Bank. It will use the proceeds to redeem bonds. "The cost benefit to the company was driven by both market driven issues and the company's strong profile," said Paul Chakmak, senior v.p. finance and treasurer, on the decision to refinance. He said a few of banks within the syndicate had approached the gaming company to say they thought the facility's terms could be modified more favorably.
Chakmak noted that Boyd decided to increase the revolver because it is the most flexible piece of the capital structure. A good portion of that $250 million upsize will be used to redeem in full, all outstanding 9 1/4% senior notes due 2009, about $200 million worth. He said the decision to call the notes now was purely an economic one, explaining that it made sense to borrow at 1 1/4% to pay off 9 1/4% notes.
The company is in the midst of "three significant expansions and developments" Chakmak said. The first project is a $600 million addition to the South Coast Hotel and Casino in Las Vegas, which will add about 700 hotel rooms, along with a spa and fitness center, which is expected to be completed in early 2006. The second project is expansion to the Blue Chip Casino in Indiana, a $163 million investment that includes a new riverboat and improvements to the dockside, which is expected to be completed by December 2005. The third project involves expansion at the Borgota Hotel Casino & Spa in Atlantic City, N.J., which Boyd runs and is a 50% owner of.
B of A, CIBC and Wells Fargo have been the historical leads for the gaming company and Chakmak said "Bank of America and Wells Fargo are by far the biggest lenders to the gaming industry." The revised facility consists of a $500 million term loan "B" with pricing at LIBOR plus 1 1/2%. It also consists of the $1.35 billion revolver with current pricing of LIBOR plus 1 1/4%. Maturity was extended for a year to June 2010.
The deal previously consisted of a $1.1 billion revolver and a $500 million term loan "B" Pricing on the revolver was based on a grid and before it was replaced was at LIBOR plus 1 1/2%. Pricing on the "B" was LIBOR plus 1 3/4%. This debt refinanced a previous facility and partially funded a portion of the company's $1.3 billion merger with Coast Casinos. At the time, Boyd also did a 10-year bond deal for $350 million at 6 3/4% with the proceeds originally being used for general corporate purposes (LMW, 4/16/04).