Bear Stearns and Merrill Lynch were betting that Penn National Gaming's earnings call last Wednesday would spark an uptick in commitments on the company's $600 million "B" piece. Last week, pricing was flexed up from LIBOR plus 31/ 2% to LIBOR plus 4%, while the pro rata spread increased from 3% to 31/ 4% over LIBOR, according to a banker familiar with the deal. The "B" had been half filled before the pricing boosts and the banker stated that momentum had picked up since the changes. Both big and small tickets have rolled into the loan since Penn National's retail launch, however the banker would not comment on updated levels.
Penn National reported record fourth quarter figures, with revenue rising 20.7% to $163.6 million, up from $135.5 million the year before. Peter Carlino, Penn National's ceo, noted in a company report that, "Our success with acquired properties highlights the potential of our anticipated accretive acquisition of Hollywood Casino Corp." The new credit will back Penn National's $780 million purchase of Hollywood Casino.
When the $800 million acquisition credit initially launched at the managing agent level, the spread on the "B" was 3% over LIBOR. The pricing on the $100 million revolver and $100 million "A" piece also increased from LIBOR plus 23/ 4% to LIBOR plus 3%. There is a 50 basis point commitment fee for pro rata retail commitments above $10 million, a banker added, while a 12.5 basis point upfront fee is being offered on the "B" loan. The deal is rated B1/B+. Multiples are 3.1 times senior leverage and 4.7 times total leverage. A Bear Stearns official declined to comment, while a Merrill banker did not return calls. William Clifford, Penn National's cfo, did not return calls.