Bank One has won the lead role on Churchill Downs' new $200 million revolving credit facility over the incumbent PNC Bank. The company sought bids for the new facility on a competitive basis, said Michael Miller, cfo of Churchill Downs, explaining the switch. Miller declined to elaborate on Bank One's proposal. But he commented that the company looks for its lead bank to be an aggressive agent, seeking the best pricing and covenant flexibility. PNC still participates on the deal as letter of credit issuer and syndication agent. "We still have a great relationship with the company and still play a material role with the company's banking needs," said a PNC spokesman.
The new credit for Churchill Downs, an owner and operator of horseracing venues, is a five-year deal priced against a leverage-based grid between LIBOR plus 11/4% and LIBOR plus 21/4%. The new deal is in conjunction with a $100 million private placement of floating-rate notes. In regard to the timing of the new deal, Miller explained that the previous $250 million revolver would have matured in March 2004 and the company wanted to obtain a new deal before that debt became current.
In addition, the company wanted to take advantage of favorable longer-term rates, which Churchill Downs was able to access by swapping a portion of its LIBOR-based rates. The proceeds from the new facility will be used to support everything from working capital needs to acquisitions to Churchill Downs' $121 million renovation plan to modernize its racetrack.