Pinnacle Entertainment increases term loan B, lowers pricing on strong demand

By Sara Rosenberg

New York, Dec. 8 - Pinnacle Entertainment Inc. made some changes to the institutional portion of its proposed credit facility, including upping the size by $10 million to a total of $225 million and reducing the pricing by 25 basis points to Libor plus 350 basis points.

The institutional tranche now consists of a $146 million funded term loan B and a $79 million delayed draw term loan B with a commitment fee of 125 basis points. The company has until Sept. 30, 2004 to draw on the term loan.

"It was well oversusbscribed so the company wanted to take the term loan up a little bit," a source close to the deal said.

Proceeds from this term loan are being used to refinance the company's existing facility, which was obtained to fund the Lake Charles project as well as a project in Belterra. However, a good portion of the project financing was being kept in a reserve account. So, with this upsized deal, the company is basically increasing what they have in that reserve account without having to draw on the proposed revolver as much as they previously anticipated, giving Pinnacle greater flexibility, the source explained.

"And, the change in pricing is a reflection of the oversubscription," the source added.

The $300 million credit facility (B1/B+) also contains a $75 million revolver with an interest rate of Libor plus 350 basis points, which was left unchanged since launching in November.

Allocations on the Las Vegas gaming company's deal are expected to take place this week, with closing on the facility anticipated to occur early next week.

Lehman Brothers and Bear Stearns are joint bookrunners and joint lead arrangers on the deal, with Lehman listed on the left and acting as administrative agent and Bear Stearns acting as syndication agent.

Meanwhile, Kinko's Inc.'s $825 million credit facility, which launched on Friday, is expected to "get done given the market" even though some don't view the deal very positively, according to a fund manager.

"The company has no assets. They generate significant free cash flow. In 2002 the company had $110 million of free cash flow. [But], the term sheet is loose. There's no excess free cash flow sweep (meaning the company is not required to pay down bank debt with excess free cash flow). And, free cash flow is one of their strengths," the fund manager explained.

The facility consists of a $150 million six-year revolver with an interest rate of Libor plus 250 basis points and a $675 million seven-year term loan B with an interest rate of Libor plus 275 basis points.

Proceeds will be used to pay a $530 million dividend to the company's equity partners and to refinance existing debt.

The deal is rated B1/BB-, according to the fund manager.

JPMorgan and Bank of America are the lead banks on the deal, with JPMorgan listed on the left.

Kinko's is a Dallas operator of service centers that provide, among other things, copying, binding and finishing services, color printing, document management and Internet access.

Some energy names were actively trading in the secondary bank loan market on Monday, including Reliant Resources Inc. and Calpine Corp., according to a trader.

Reliant, a Houston electric and energy company, was quoted at 96½ bid, 97 offered.

Calpine, a San Jose, Calif., power company, was quoted at 97 bid, 97½ offered.

"They're unchanged, but they've been active," the trader said. "The better energy tone probably goes all the way back to Mission Energy. People have a different opinion. Outlooks on the fundamentals of energy have changed."

Goodyear Tire & Rubber Co.'s U.S. term loan was quoted at 99¼ bid, 99 7/8 offered and the U.S. revolver was quoted at 98 bid, 99 offered, basically unchanged from opening levels, as the debt took a breather from a climb upward late last week on a bond offering rumor, according to a trader.

Toward the early part of last week, the Akron, Ohio, tire and rubber company's term loan was quoted at 98¾ bid, 99½ offered and the revolver was quoted at 97¾ bid, 98¾ offered, according to the trader.

"It rose pretty steadily throughout last week. Bond rumor is that they're doing a large deal - $1 billion - with half of that going to repay bank debt. More specifically (the bond will repay) term loan debt, I believe," the trader said.

In follow-up news, Apollo Management LP completed its acquisition of General Nutrition Cos. Inc. from Royal Numico NV. In connection with this transaction, GNC obtained a new $360 million credit facility (B1/B+).

"We believe that the Apollo acquisition will benefit the entire company, from our manufacturing, distribution and retail operations to our employees and franchise operators. Apollo made this investment because it sees tremendous value in the power of the GNC brand. We look forward to working closely with Apollo and leveraging their expertise in retailing as we take the company to the next level," said Lou Mancini, president and chief executive officer, in a company news release.

The facility consists of a $75 million five-year revolver with an interest rate of Libor plus 300 basis points and a $285 million six-year term loan B with an interest rate of Libor plus 300 basis points, reduced from original pricing of Libor plus 325 basis points during syndication.

The term loan B also contains a pricing grid that allows the rate to reduce even further to Libor plus 275 basis points if total leverage is less than three times.

Lehman and JPMorgan were the lead banks on the deal.

GNC is a Pittsburgh producer of nutritional supplements.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.