Barclays Capital Agents $325 Term Loan for Pinnacle
Pinnacle Entertainment said it has received commitments from a syndicate of lenders for a $325 million incremental term loan under its current credit facility. The term loan will be issued at a price of 99% with an interest rate of 300 basis points over LIBOR and a 1% LIBOR floor. Pinnacle was originally seeking commitments for a $250 million incremental term loan under its current credit facility.
According to an 8-K filing, Pinnacle entered into an underwriting agreement with J.P. Morgan Securities, Merrill Lynch, Barclays Capital, Credit Agricole Securities, Deutsche Bank Securities and UBS Securities as representatives for the underwriters to sell $325 million of the company’s senior subordinated notes. The offering was contingent on the concurrent closing of an incremental term loan under the company’s credit agreement. An affiliate of Barclays Capital acts as administrative agent, Merrill Lynch and J.P. Morgan Securities act as joint lead arrangers and joint bookrunners and certain of the underwriters or their affiliates are syndication agent, senior managing agent or lenders for the term loan.
The term loan is expected to mature in March 2019, provided that such date will be accelerated to (a) December 15, 2014 if any portion of the company’s 7.5% senior subordinated notes due 2015 are outstanding on December 15, 2014, and (b) May 1, 2017 if any portion of the company’s 8.625% senior notes due 2017 are outstanding on May 1, 2017. The closing of the term loan is conditioned on final documentation and other customary closing conditions.
Pinnacle intends to use a portion of the net proceeds of the term loan to redeem a portion of its 7.5% senior subordinated notes due 2015 at a redemption price equal to 103.75% of par, plus accrued and unpaid interest. The Company also intends to use a portion of the net proceeds of the term loan to repay all revolving credit borrowings outstanding under its credit facility. Additional net proceeds of the term loan will be used to continue development at the company’s L’Auberge Casino & Hotel in Baton Rouge and its River City Casino in St. Louis, for possible future development at its River Downs racetrack in Cincinnati and for general corporate purposes. The term loan is expected to reduce the company’s need to draw on its $410 million revolving credit facility for future operations and these development opportunities.
Las Vegas, NV-based Pinnacle Entertainment owns and operates seven casinos, located in Louisiana, Missouri, Indiana and Nevada, and a racetrack in Ohio. Pinnacle is also developing L’Auberge Casino & Hotel Baton Rouge.