Isle of Capri Black Hawk's bank meeting for $135 million add-on well attended

By Sara Rosenberg

New York, Feb. 5 - Isle of Capri Black Hawk LLC held a bank meeting late in the day on Wednesday for existing lenders and other invited possible lenders about the amendment to its credit facility to increase the sizes of its revolver and add an institutional tranche. CIBC is the administrative agent on the deal.

Since the bank meeting was still going on at 5:30 pm ET, there was not much in the way of color on the deal. However, a syndicate source did sound optimistic and admitted that the bank meeting had "great attendance".

More specifically, the company is seeking to add a $105 million term loan C with an interest rate of Libor plus 400 basis points, which is where the company's existing term loan B is priced, to its credit facility and increase its revolver to $40 million from $10 million. The revolver has an interest rate that can range from Libor plus 325 to Libor plus 400 basis points, depending on leverage.

The increased revolver would still be due in 2005 and the term loan C would be due in the same year as the existing term loan B, which is 2006.

Currently, the company's existing credit facility consists of a $10 million revolver, a term loan A sized in the high $20 million area and a term loan B sized in the high $30 million area.

After all the changes, the new credit facility is expected to be in the aggregate amount of $210 million, "not all of which would be drawn," a company spokesman previously told Prospect News.

Proceeds from the institutional add-on will be used to help fund the purchase of Colorado Central Station Casino and Colorado Grande Casino from International Game Technology, Inc. The transaction is expected to be completed some time in April.

When asked why take the option of adding on to a credit facility as opposed to raising capital some other way, the spokesman responded: "L+400 is about 6%. You think anyone will sell bonds at 6%? It's cash out the door. How much do I want to spend?"

Isle of Capri Black Hawk is a Colorado hotel casino that is jointly owned by Isle of Capri Casinos and Nevada Gold & Casinos.

In follow-up news, Silgan Holdings Inc.'s recently launched $100 million add-on term loan has been so successful in its syndication process that the company is now considering taking advantage of the built-in option to upsize the deal, according to a syndicate source. Deutsche Bank is the lead bank on the deal.

"It's doing really well. There's a pretty substantial oversubscription," the syndicate source added.

The credit facility, which launched late last week was oversubscribed on the day of the bank meeting as a lot existing lenders and some "new guys" opted to participate in the deal, a syndicate source previously told Prospect News.

The term loan has an interest rate of Libor plus 200 basis points, which is the same rate that the company's existing senior secured credit facility carries.

This past summer, the company closed on an $850 million senior secured credit facility, which was used to refinance the existing loan ahead of its December 2003 maturity. Deutsche Bank Securities Inc. and Banc of America Securities LLC were joint lead arrangers and Deutsche Bank Trust Company Americas, Bank of America, Citicorp USA Inc., Morgan Stanley Senior Funding Inc. and Fleet National Bank were the agents.

The loan consisted of a $100 million term loan A due June 28. 2008, a $350 million term loan B due Nov. 30, 2008 and a $400 million revolver due June 28, 2008. The agreement also provided the company with an incremental uncommitted term loan of up to $275 million, which could be used for acquisitions. All tranches were priced with an interest rate of Libor plus 200 basis points.

Proceeds are being used to help fund the acquisition of the remaining 65% percent interest in the White Cap joint venture from Amcor White Cap Inc., according to a news release. The purchase price for the equity and outstanding debt obligations of the joint venture is expected to total approximately $125 million.

The financing and the acquisition are expected to be completed in the first quarter.

Silgan Holdings is a Stamford, Conn. manufacturer of consumer goods packaging products.

Sun Media Corp.'s $200 million six-year term loan B was flexed down this week to Libor plus 250 basis points from Libor plus 300 basis points, according to market sources.

This loan was also anticipated to go smoothly by market participants mainly because of the company's appealing capital structure.

"It has a nice capital structure. U.S. term loan. Canadian revolver. The book equity is suggestive of the fact that they're not putting much leverage on this thing. I think it's under two times leverage at the bank level," a source previously explained to Prospect News.

"[The company] is nothing particularly sexy but it looks well under-levered. People will look at this and say 'great capital structure. I'll take it'," the source continued.

"Some of the proceeds, $200 million, are going to pay dividends at the parent company. Some people won't like that. But I don't think that will stop it from getting done."

Bank of America is the lead bank on the Toronto newspaper publisher's credit facility, which also contains a C$75 million five-year revolver.

Besides going towards dividend payments, proceeds from the loan will also be used to refinance existing bank debt.

In the secondary, Charter Communications Inc.'s bank debt actively traded on Wednesday in the lower 80's, depending on the tranche, as investors grew comfortable with quotes on the paper, according to a trader.

"It's starting to jump around a little more," the trader said. "This is indicative that people believe that's kind of a stable level. You don't have sellers at 87 and buyers at 79."

The paper has fluctuated as the St. Louis cable company underwent rating downgrades, management changes, the re-audit of its 2000 and 2001 financial statements, and the anticipation that the growth rate of fourth quarter revenue will be at or near the low end of its prior revenue guidance of 8 to 9% and fourth quarter operating cash flow will be less than previous guidance.

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