Las Vegas-based Mandalay Resort Group's new $1.25 billion credit facility brought several new players to the casino operator's table as the banks gamble on providing commercial loans to win investment banking business. Glenn Schaeffer, president and cfo of Mandalay, said new banks came in on the refinanced credit that was oversubscribed by 30% and closed last week. He could not comment on potential investment banking business Mandalay has to offer.
Citigroup, a co-lead, did not have a relationship previously with Mandalay and Credit Suisse First Boston entered the lending market to the gaming industry for the first time, Schaeffer said. He believes that any investment bank wanting to compete effectively has to offer corporate lending. "The future is pretty much here with hybrid banks," Schaeffer said. For the most part, Deutsche Bank, a syndicating agent on the credit, and Citigroup are banks with a combination of commercial and securities arms, Schaeffer commented. This was Citigroup's first lead title on a gaming deal, though Salomon Smith Barney was historically active in the sector.
Bank of America, the co-lead, led the previous $1.8 billion loan that was refinanced due to impending maturities (LMW, 7/2). Schaeffer said pricing was slightly thinner on the last credit, due to a lowering from investment grade to sub-investment grade status and the tighter lending environment. The spread on the new credit is LIBOR plus 13/ 4% compared to LIBOR plus 35-75 basis points on the old loan. The new facilities consist of a $850 million five-year revolver, a $250 million five-year term loan and a $150 million five-year term loan.