Isle of Capri says note redemption to raise net income by $3 million

New York, Dec. 10 - Isle Of Capri Black Hawk LLC said repayment of its outstanding 13% first mortgage notes due 2004 using proceeds from a new credit facility will increase after-tax net income by $3.0 million a year.

The hotel-casino, the largest in Colorado, announced on Nov. 16 that it will redeem the $75 million principal amount of the notes on Dec. 18 at a price of 106.5 plus accrued interest.

Isle of Capri Black Hawk will record a charge of $6.8 million in its third quarter for early extinguishment of debt, according to a filing with the Securities and Exchange Commission Monday.

To fund the early redemption, the company is talking out a new $90 million secured credit facility from a bank syndicate with CIBC World Markets as administrative agent.

The facility is made up of two $40 million term loans and a $10 million revolver, the company said in the SEC filing.

On a blended basis, the interest rate will vary from Libor plus 275 basis points to Libor plus 400 basis points, depending on consolidated total leverage and the size of borrowings.

Isle of Capri Black Hawk assumed a rate of 7% to reach its forecast of increased after-tax net income.

Undrawn availability on the revolver can be used for working capital and other general corporate purposes.

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