Eldorado amends credit letters for covenant relief, commitment upsize

By Wendy Van Sickle

Columbus, Ohio, June 15 – Eldorado Resorts Inc. entered into an amendment on Monday to its amended and restated commitment letter dated as of July 19, 2019 in order to amend the terms of its new credit agreement to be entered into on the closing date of Eldorado’s acquisition of Caesars Entertainment Corp., according to an 8-K filing with the Securities and Exchange Commission.

The amendment was intended to address the effects of property closures resulting from Covid-19.

The amended terms for the new credit agreement provide that the senior secured leverage ratio financial covenant will be set at 6.35 to 1.0, but will not be tested until the earlier of the fiscal quarter ending Sept. 30, 2021 and the first fiscal quarter ending after Eldorado elects to terminate this covenant relief period, as long as Eldorado complies with additional restrictions on permitted debt, investments and restricted payments and maintains minimum liquidity of $850 million under the new and existing credit agreements.

Additionally, Eldorado entered into a side letter to the commitment letter under which the lenders committed to provide an additional $185 million of commitments under the new revolver upon the closing of the merger and $25 million of additional commitments under the existing Caesars Resort Collection, LLC revolver.

The additional revolving commitments are subject to the same conditions applicable to the revolving credit facility commitments under the commitment letter for the new revolver, the consummation of an equity offering of at least 16 million shares of Eldorado’s stock and the receipt of regulatory approvals.

Finally, Eldorado’s existing credit agreement dated April 17, 2017 with JPMorgan Chase Bank, NA as administrative agent was amended to provide covenant relief in light of Covid-19.

As a result, the financial covenants will note be tested until the earlier of the fiscal quarter ending Sept. 30, 2021 and the first fiscal quarter ending after Eldorado elects to terminate the covenant relief period.

In order for the covenant relief to be effective, Eldorado must maintain minimum liquidity of $200 million and comply with limitations on its ability to make some investments and acquisitions, incur additional debt and make restricted payments and prepayments on subordinated, junior lien or unsecured indebtedness.

The existing credit agreement provides for a term loan facility in an original principal amount of $1.45 billion and a $500 million revolver.

Eldorado is a Reno, Nev.-based gaming company. Caesars is a Las Vegas-based gaming and entertainment company. Upon completion of the transaction the combined company will retain the Caesars name and be based in Reno.

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