Wynn Las Vegas expected to launch Tuesday, investors have mixed views

By Sara Rosenberg

New York, July 29 - Wynn Las Vegas, a subsidiary of the Las Vegas, Nev. gaming company Wynn Resorts Ltd., is scheduled to launch its new $1 billion senior secured credit facility Tuesday, which will be used to help finance development and construction of Le Rêve, a luxury hotel and casino resort in Las Vegas, Nev., and to meet pre-opening expenses and debt service obligations.

Some market participants are planning to give the deal a miss since construction of the Le Rêve has not yet begun. Others, however, say that Steve Wynn's reputation may pull the deal together.

"We're going to look at the deal but not participate," a fund manager said. "It's too big a deal with nothing to show for it. We'd like to see some progress from the ground up.

"We participated in the Borgata deal because there was more to show. They were about halfway through with the property. They were able to show that they were on schedule and on budget," the fund manager explained. "That's what we'd like to see with Wynn.

"I think it's going to be extremely difficult to get this deal done," the fund manager added.

"This is big for banks in gaming," a second fund manager previously told Prospect News. "But, people have had positive experiences with the sector and the CDO bid may be okay. [And], Steve Wynn has never failed. He always pays off his debt so if anyone can get it done, he can. It's all about reputation."

However, the fund manager added, the deal will depend on whether the mortgage bonds get done. "It's $350 million second mortgage bonds issued under a large amount of bank debt. That's a tough sale," the fund manager said.

The loan consists of a $250 million delayed-draw senior secured term loan with an interest rate of Libor plus 425 basis points and a $750 million senior secured revolver with an interest rate of Libor plus 400 basis points, the syndicate source said. There is an undrawn fee on the revolver of 200 basis points and an undrawn fee on the term loan of 250 basis points, market sources said.

Deutsche Bank will act as sole administrative agent, joint advisor, joint bookrunner and joint lead arranger. Bank of America will act as sole syndication agent, joint advisor, joint bookrunner and joint lead arranger. Bear Stearns will act as documentation agent, joint advisor, joint bookrunner and arranger, according to a filing with the Securities and Exchange Commission.

"We anticipate that we will begin to draw down funds under these facilities, subject to satisfaction of the conditions in the disbursement agreement, approximately 16-19 months after the closing," the filing said. "We anticipate that we will draw down approximately $747 million under the revolving credit facility to fund construction, development, equipping and opening of Le Rêve." In addition, the company anticipates drawing $250 million under the term loan for Le Rêve.

The credit facilities are expected to close concurrently with the closing of the initial public offering. Besides Wynn Resorts common stock sale, Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp., will jointly offer $350 million in aggregate principal amount of second mortgage notes.

Also in primary activity this week, Dade Behring Inc. is scheduled to launch its new $575 million exit financing facility, which is part of a prepackaged Chapter 11 restructuring, on Thursday, according to a syndicate source. The Deerfield, Ill. clinical diagnostic company's loan consists of a $125 million five-year revolver and a $450 million six-year term loan B, the syndicate source said. Deutsche Bank is sole lead on the deal.

Meanwhile, with talk of postponing deals that were slated for launch in August until September circulating around the bank loan market place, some are expecting a quiet month in terms of primary activity.

"A lot of deals have recently been flexed up recently - Giant Eagle, Moore Corp. and Regal Cinemas, which was supposed to reprice its term B at Libor plus 250 basis points but is now coming at Libor plus 275 basis points. This shows that there is investor hesitancy," a fund manager said. With this lack of enthusiasm in the current market, issuers are considering holding off on new deals until there are better market conditions, the fund manager explained.

In other news, syndication on Casella Waste Systems Inc.'s $300 million senior secured credit facility (B1/BB-) "has been put on hold", a syndicate source said. The loan was postponed in conjunction with last week's postponement of a $150 million 10-year senior subordinated notes offering. Fleet Securities and Bank of Americas are the lead banks on the deal.

Casella's loan consisted of a $175 million five-year revolver with an interest rate of Libor plus 275 basis points and a $125 million term loan B with an interest rate of Libor plus 325 basis points.

Proceeds were intended for the repayment of outstanding bank debt. The postponement of the deal should not affect the company since there is an existing credit facility and this proposed loan was only a refinancing, according to a syndicate source.

Presently, the company has a $399.3 million credit facility with a group of banks for which Fleet Bank is acting as agent, according to a filing with the Securities and Exchange Commission. This credit facility consists of a $280 million senior secured revolver due in Dec. 2004, with about $83.3 million available at April 30, 2002, and a senior secured delayed draw term loan B due in Dec. 2006, which had an outstanding balance of $119.3 million at April 30, 2002. All company assets, including its interest in the equity securities of its subsidiaries, secure the credit facility.

Casella Waste Systems is a Rutland, Vt. provider of collection, transfer, disposal and recycling services.

Commitments for IASIS Healthcare Corp.'s $463 million credit facility are expected to be solicited following the company's Aug. 1 release of third quarter results, according to market sources. Solicitation of commitments is being delayed to give investors time to evaluate the credit, a market professional said.

IASIS' loan consists of a $125 million five-year revolver with an interest rate of Libor plus 350 basis points and a $338 million six-year term B with an interest rate of Libor plus 350 basis points. Bank of America and BNP Paribas are the lead banks on the deal.

IASIS is a Franklin, Tenn. acute care hospital company that is a portfolio company of Joseph Littlejohn & Levy.

In secondary activity, Tyco International Ltd. continued its recent upward momentum, strengthening by half a point to one point on Monday, a trader said. The 2006 paper was quoted around 81 and the 2003 paper was quoted around 93, although, the trader added that he hadn't seen many quotes on the 2003 paper.

The Pembroke, Bermuda diversified manufacturing and service company is still reaping the benefits of appointing Edward Breen as its new chairman and chief executive officer On Thursday, the trader explained.

Furthermore, with equities performing well on Monday, there's a better market tone, the trader added.

A second trader disagreed, saying that bank loan is "still a tough market" with "no exuberance". More than one day of good performance in the stock market is needed to see an improvement in bank loans, he added.

At closing, the Dow Jones Industrial Average was up 447.50 to 8711.80, the S&P 500 was up 46.12 to 898.96 and the New York Stock Exchange was up 242.97 to 4803.74.

© 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.