Boyd Gaming has secured a $187.5 million "B" term loan to replace an undrawn bridge loan backing the construction of Borgata, a resort and spa in Atlantic City, N.J. It was necessary to obtain the "B" loan because the cost of using the bridge loan would have grown increasingly expensive with time, said Ellis Landau, cfo. In addition, the Las Vegas gaming company wanted to put in place a longer-term loan, which the institutional market was willing to provide, he explained.
The new five-year term loan is priced at LIBOR plus 4%. If the bridge loan were drawn, it would have held initial pricing of LIBOR plus 41/ 2%. In addition, the spread would have increased 25 basis points every quarter, Landau noted. The unused bridge loan commitment was set to expire in September.
The Borgata project, a joint venture between Boyd and MGM Mirage, also has access to a seven-year, $442 million "A" term loan priced at LIBOR plus 3%. This loan was negotiated in conjunction with the bridge facility in December 2000 and can be drawn as needed, Landau said, adding that the "A" loan is currently fully available.
CIBC World Markets, Deutsche Bank, Bank of America, Lehman Brothers and FleetBoston Financial were involved in the initial financing, while the new term loan was arranged by CIBC and Lehman. The banks were chosen because they played major roles on former Boyd and MGM credits, Landau said. He also noted that the banks involved are top gaming banks, which was important in attracting long-term institutional lenders. "I think having a strong bank group was important to bringing in other participants," he added.