PITG Gaming upsizes first- and second-lien loans, revises terms

By Sara Rosenberg

New York, May 5 - PITG Gaming increased the size of its first- and second-lien term loans, and modified various components of the tranches, according to a market source.

The first-lien term loan is now sized at $380 million, up from $370 million, and while pricing was left unchanged at Libor plus 600 basis points, with a 3.25% Libor floor, the original issue discount was increased to 94 from 96, the source said.

In addition, call protection on the first-lien term loan is now non-callable for 2½ years, then at 102, 101, as opposed to being non-callable for 1½ years, then at 102, 101.

All-in yield on the first-lien term loan is 13%.

The second-lien term loan is now sized at $260 million, up from $250 million, pricing was increased to Libor plus 1000 bps cash plus 500 bps PIK, from Libor plus 1000 bps cash plus 300 bps PIK, with the Libor floor staying at 3.25%, and the original issue discount was increased to 92 from 96, the source continued.

Furthermore, call protection on the second-lien term loan is now non-callable for 2½ years, then at 109, 107, 105, as opposed to non-callable two years, then at 106, 104, 102.

Second-lien lenders are being offered warrants for 5% of the company's equity.

All-in yield on the second-lien term loan is about 27% plus the warrants.

PITG Gaming's credit facility also includes a $10 million revolver priced at Libor plus 600 bps, with a 3.25% Libor floor.

Credit Suisse is the lead bank on the now $650 million deal, up from $630 million.

Proceeds will be used to help fund the Majestic Star Casino LLC's Pittsburgh casino. Construction started in December and the grand opening is projected for May 2009.

The upsizings to the first- and second-lien term loans were done to fund the increase to the original issue discounts.

Following the changes to the credit facility, Standard & Poor's raised PITG Gaming's corporate credit rating to B from B-, revolver and first-lien term loan rating to B+ from B, and second-lien term loan rating to CCC+ from CCC.

S&P said that the upgrade reflects meaningful changes to the originally proposed structure, including an amendment to the completion guarantee provided by Barden Nevada Gaming LLC, which offers additional liquidity in the event of a slow ramp-up of the facility.

The amendment calls for a $35 million completion guarantee and requires that any unused portion be deposited into a liquidity reserve account upon completion of construction. The previous structure limited Barden Nevada's commitment to a $25 million completion guarantee, which included a $10 million contribution to the liquidity reserve account that would have been offset dollar for dollar by any amount remaining in the interest reserve account upon completion of construction.

Moody's Investors Service, on the other hand, affirmed its ratings on PITG, including a B3 corporate family rating, Ba3 revolver and first-lien term loan rating, and Caa1 second-lien term loan rating.

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