The Isle of Capri Black Hawk has secured a $90 million credit facility with CIBC World Markets to refinance $75 million in mortgage notes due in 2004, allowing the company to obtain a much cheaper form of financing. "Black Hawk wanted to pay off the notes because of the very low rates, getting cheaper capital with a more flexible structure," said Rex Yeisley, senior v.p., and cfo."CIBC is leading because of relationship, price and credibility--we believed they could get it done," he added. CIBC is the senior lender to Isle of Capri and so amid other alternatives, it seemed right, Yeisley stated. Isle of Capri owns 57% of the venture and Nevada Gold & Casinos owns the rest. Funding of the facility is contingent on Black Hawk granting a security interest to CIBC.
Pricing on the credit is in the region of LIBOR plus 23/4 % to LIBOR plus 4%, Yeisley said. The rate depends on total leverage and the amount drawn, he explained The deal will take out 13% of the mortgage debt, he added. There is a private debt rating, he noted, in the B+ range, but he declined to be more specific. The facility is split between a $10 million revolver and two separate $40 million term loans. "Black Hawk did not need such a large revolver since it is only used for working capital and the banks also wanted a specific structure," Yeisley said.