Peninsula Gaming to launch $875 million credit facility on Thursday

By Sara Rosenberg

New York, July 25 - Peninsula Gaming LLC has scheduled a bank meeting for Thursday morning to launch a proposed $875 million five-year credit facility, according to sources.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc. and UBS Securities LLC are leading the debt.

The facility consists of a $50 million revolver and an $825 million term loan B, sources said.

By comparison, an 8-K filed with the Securities and Exchange Commission in May had the term loan B sized at $800 million.

The filing said that the revolver would have a 50 basis point commitment fee, the term loan would have a 1.25% Libor floor and 101 soft call protection for one year, and the entire deal could be issued at an original issue discount of 99.

Amortization on the term loan B is 1% per annum.

There is a $50 million accordion feature.

Financial covenants include a maximum leverage ratio and a minimum fixed charge coverage ratio.

Proceeds will be used to help fund the company's acquisition by Boyd Gaming Corp. for $1.45 billion and refinance about $700 million of Peninsula's existing debt.

The 8-K filing had outlined other funds for the transaction as coming from $350 million of senior notes, $200 million in cash from Boyd and a roughly $144 million seller note.

Backing the notes is a commitment for a $350 million senior unsecured bridge loan that has a 1.5% Libor floor.

The six-year PIK seller note will have a coupon of 0% in year one, 6% in year two, 8% in year three and 10% thereafter. It is prepayable at all times.

For its end, Boyd received a commitment for a $150 million incremental revolver and or term loan due Dec. 17, 2015 that has pricing ranging from Libor plus 250 bps to 350 bps and an unused fee of 25 bps to 50 bps based on leverage.

The transaction is expected to increase free cash flow generation, which would accelerate future leverage reduction and add over $70 million in free cash flow.

Peninsula is Dubuque, Iowa-based owner and operator of casinos and off-track betting parlors. Boyd is a Las Vegas-based owner and operator of gaming entertainment properties.

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