Peninsula Gaming talks $825 million term loan B at Libor plus 450 bps

By Sara Rosenberg

New York, July 26 - Peninsula Gaming LLC launched its $825 million term loan B (B1/B+) on Thursday with price talk of Libor plus 450 basis points with a 1.25% Libor floor and an original issue discount of 99, according to a market source.

The loan has a ticking fee of 50 bps that starts after 30 days and is in effect until day 60. The fee then steps up to half the spread from days 61 through 105 and to the full spread thereafter, the source said.

Commitments are due at 12 p.m. ET on Aug. 2.

The company's $875 million five-year credit facility also provides for a $50 million revolver (Ba2/BB-).

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

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 to refinance about $700 million of Peninsula's existing debt.

Based on regulatory filings, other funds for the transaction are expected to come 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 part, Boyd received a commitment for either a $150 million incremental revolver and a term loan due Dec. 17, 2015 or one of the two. The term loan 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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