Harrah's Entertainment has received a new $1.963 billion, five-year credit, pushing out its bank loan maturities five years. "It extends the maturity and gives assurance that the funds will be available when we need them," said Charles Atwood, Harrah's senior v.p., cfo and treasurer. Banks are no longer interested in 364-day facilities, he added, explaining that the market is leaning toward longer credits.
Harrah's, a Las Vegas-based gaming company, decided to tap the loan market because its $332 million, 364-day facility was maturing at the same time as the company's former $1.525 billion, five-year revolver was becoming current. The company took the opportunity to roll its entire credit exposure into one facility, explained Atwood. The new facility comprises a $1.063 billion revolver and a $900 million "A" term loan. "Lenders want to have some assurance that there would be substantial draw on the facility," said Atwood, regarding why the term loan structure was chosen on this latest go around.
Both tranches on the new facility are priced at LIBOR plus 105 basis points compared to the 80 basis point spread on the former facility, an increase that Atwood attributed to the changing market temperature. Bank of America and Wells Fargo Bank lead the new credit. B of A held the lead roles on the company's former facilities. Wells Fargo has been working with the company for over 50 years and had participated on the company's credit in the past, noted Atwood.