Bear Stearns and Merrill Lynch have reached just under the halfway point in filling Penn National Gaming's $600 "B" piece, however some investors were waiting on President George Bush's State of the Union Address to consider any bids into the credit. "There are big macro things going on this week," a banker explained, while another banker concurred that Bush's speech, assessing issues such as the prospect of war in Iraq and the state of the economy, have market players waiting to make investment moves. Both big and small tickets have rolled into the deal since its Jan. 23 retail launch, the banker noted. The $800 million acquisition credit's "B" piece stands at LIBOR plus 3 1/2%, and the lead banks do not expect any concessions at this point, the banker said, adding that the deadline is Feb. 10.
When 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 2 3/4% to LIBOR plus 3%. The banker said the pricing increases complement the B1 and expected B+ ratings on the credit. 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.
The deal will back Penn National's $780 million acquisition of Hollywood Casino Corp. The lead banks shopped the credit at the senior level last October, but postponed the retail syndication until the transaction's regulatory approval was close to completion. Another banker noted that these approvals should wrap up sometime in February. Société Générale and Credit Lyonnais already signed on at the senior agent level, while Wells Fargo and Wachovia Bank also joined in the first round (LMW, 1/13). Penn National owns or operates horse racing and casino gaming facilities in the U.S. and Canada. William Clifford, Penn National's cfo, did not return calls by press time.