International Game Technology's (IGT) new bank debt package provides the company with increased liquidity and cash availability for potential acquisitions or its share repurchase program. The bank debt, which comprises a five-year, $1.3 billion revolver and five-year, $200 million term loan, increases the revolver by $500 million and replaces a $260 million credit line.
"IGT historically has always liked to have a lot of liquidity and a lot of cash availability to be opportunistic with potential acquisition opportunities in the market or our share repurchase program," noted Rich Baldwin, director of finance and investor relations for the gaming company.
BNY Capital Markets led the old facility, but Bank of America and Wells Fargo were added to the lead roles alongside BNY to enable the company to raise the additional cash. "B of A and Wells do a lot of business in the gaming industry and for us to go out and raise $1.5 billion we just wanted to go with more than one bank," Baldwin explained. B of A acted as syndication agent and Wells Fargo is admin agent. The Bank of New York, The Royal Bank of Scotland, Mizuho Corporate Bank and Union Bank of California are co-documentation agents.
The company retired its higher-cost fixed debt using cash in the bank and the $200 million term loan. "We have a lot of cash sitting on the balance sheet generating very nominal interest income," Baldwin noted. "We wanted to address the issue of negative carry." IGT had two bond issuances, one due in May 2004 and another due in 2009, which had an average coupon of about 8%. The new credit carries a spread of LIBOR plus 60 basis points. "Pricing was very, very good," Baldwin noted.