MGM Studios refinancing $1.5 billion; Boyd Gaming, Borgata launching simultaneously

By Sara Rosenberg

New York, April 19 - News of May's upcoming primary offerings surfaced Friday with MGM Studios' $1.5 billion refinancing leading the list. Other new offerings include Boyd Gaming Corp. and the Borgata, an entertainment resort currently under construction in Atlantic City.

MGM Studios is expecting to hold a bank meeting in mid-May regarding its $1.5 billion credit facility, which will be used to refinance the current facility. Bank of America, JPMorgan Chase and Fleet are co-lead arrangers for the deal according to a company spokesman. The loan is expected to close at the end of May or early June.

According to a syndicate source, the loan was launched on Thursday to agents. The loan consists of a $600 million term B, a $600 million revolver and a $300 million term A. The term A and term B are expected to mature within six to eight years, while the revolver is expected to mature within six to seven years. According to the company spokesman, interest rates should be comparable with the existing credit facility, which are Libor plus 250 basis points on the revolver and term A and Libor plus 275 basis points on the term B. Company stocks and assets will be used to secure the loan.

Boyd Gaming is scheduled to hold a bank meeting in early May regarding its $500 million credit facility (Ba1/BB). CIBC is sole lead arranger for the deal. The loan is expected to consist of a $400 million five-year revolver and a $100 million five-year term B. According to the syndicate, the interest rate on the credit facilities will probably be around 250 basis points over Libor. There is a commitment fee of 50 basis points on the revolver.

The Borgata, a joint venture with Boyd Gaming and MGM Mirage, is expected to hold its bank meeting concurrently with Boyd Gaming regarding a new credit facility, according to a syndicate source. CIBC is the sole lead arranger for the deal.

According to the syndicate, the term B tranche credit facility will be used to refinance a $187.5 million bridge component of the company's bank debt. The company's construction loan is expected to remain in place.

In recent primary activity, Seagate Technology International held a bank meeting Thursday for its new $500 million credit facility (Ba2), according to market sources. J.P. Morgan Securities and Morgan Stanley Senior Funding are joint lead arrangers and joint bookrunners, according to a company press release. JP Morgan Chase Bank is the administrative agent. And Morgan Stanley Senior Funding is the syndication agent.

The loan consists of a $350 million five-year term B with an interest rate of Libor plus 250 basis points and a $150 million five-year revolver with an interest rate of Libor plus 200 basis points, according to market sources. Proceeds will be used to refinance the company's existing credit facility and to repay outstanding obligations under its 12½% senior subordinated notes due 2007.

The syndicate and the company were not immediately available to confirm this information.

In follow-up news, Titan Corp.'s recently launched $450 million senior secured credit facility (Ba3/BB-) is well oversubscribed, according to a syndicate source. Wachovia is sole bookrunner and lead arranger for the transaction. The loan consists of a $350 million seven-year term B tranche with an interest rate of Libor plus 325 basis points and a $100 million six-year revolver with an interest rate of Libor plus 225 basis points.

"We haven't formally shut it down," the syndicate source said. "But it has slowed down. We don't expect to see much more activity since anyone who wanted to commit already did."

Also, Corrections Corp. of America's recently launched $695 million credit facility is reported to be all out of institutional paper. The pro rata portion is still being worked on, according to the syndicate, "but it's going well". Lehman Brothers is the lead arranger and bookrunner.

The loan consists of a $75 million four-year revolver with an interest rate of Libor plus 350 basis points, a $125 million four-year term A with an interest rate of Libor plus 350 basis points, and a $495 million six-year term B with an interest rate of Libor plus 400 basis points.

In other news, Arch Coal Inc. closed on its $1.025 billion refinancing senior secured credit facility (Ba1/BB+) on Thursday, according to a company spokesman. PNC and J.P. Morgan Chase acted as co-lead arrangers and co-bookrunners on the deal. PNC Bank was also the administrative agent.

The credit facility is split into three segments, which, according to the company spokesman, priced at previously announced expected levels. The $350 million five-year revolver has an interest rate of Libor plus 175 basis points and a commitment fee on undrawn funds of 37.5 basis points. The five-year $150 million term loan A has an interest rate of Libor plus 250 basis points and no amortization schedule. And, the six-year $525 million term loan B has an interest rate of Libor plus 300 basis points and no amortization schedule. The revolver is for Arch Coal Inc., while the two term loans are for the company's subsidiary, Arch Western Resources, LLC. The term is secured by Arch Western Resources' membership interest in its subsidiaries.

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