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Isle of Capri Seeks $825 Million of Loans to Pay Down Term Debt

Isle of Capri Casinos Inc., the developer, owner and operator of gaming facilities, is seeking $825 million of loans to refinance existing bank debt.

The company is in discussions with lenders to raise a $325 million revolving credit line maturing 2016 and a $500 million term loan due 2017, St. Louis-based Isle of Capri said today in a regulatory filing. The company said it also plans to sell $300 million of senior notes due 2019 to repay existing term loans.

Wells Fargo & Co., Credit Suisse Group AG and Deutsche Bank AG are arranging the loans and will host a lender meeting March 3 at 10 a.m. in New York, according to two people briefed on the transaction.

Isle of Capri plans to offer term-loan lenders an interest rate 3.5 percentage points more than the London interbank offered rate, said the people, who declined to be identified because the terms are private. Libor, the rate banks charge to lend to each other, will have a 1.25 percent floor.

The company may issue the debt at a so-called original-issue discount, which reduces proceeds for the borrower and boosts the yield for investors, the people said.

Jill Haynes, a spokeswoman for Isle of Capri, declined to comment.

As of Jan. 23, Isle of Capri owed $810.9 million on its term loans maturing Nov. 25, 2013, and had $79.5 million outstanding under its $375 million revolver due July 26, 2012, according to the company’s most recent quarterly report filed with the U.S. Securities and Exchange Commission.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.

Isle of Capri had a weighted average interest rate of 6.47 percent on its credit facility, the quarterly report shows. The company pays a margin of 3 percentage points more than Libor on the loans and the lending benchmark has a 2 percent floor for the term debt, according to data compiled by Bloomberg.

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