Caesars Entertainment Corp. proposed interest rates it will pay on as much as $4 billion of term loans for which the hotel and casino operator is asking lenders to extend the maturity date, according to a person with knowledge of the transaction.
The extended debt will pay 4.5 percentage points to 4.75 percentage points more than the London interbank offered rate, said the person, who declined to be identified because the terms are private.
Caesars will pay 4.5 percentage points more than Libor if $3.25 billion or less of the loans are extended and a 4.75 percentage-point margin if maturities on more than $3.25 billion are pushed out, the person said. The Las Vegas-based company said yesterday that it’s seeking to extend the maturity on as much as $4 billion of term loans to January 2018 from January 2015 and boost the interest rate on that portion.
The company’s existing B1, B2 and B3 term loans pay 3 percentage points more than Libor with no minimum on the benchmark, according to data compiled by Bloomberg.
Lenders are being offered a 10 basis-point amendment fee as well as a 15 basis-point fee if they agree to the extension, the person said. A basis point is 0.01 percentage point.
Caesars also is seeking to extend the maturity on a $1.2 billion revolving line of credit to January 2017 from January 2014, the person said.
The extended revolver will pay 4.5 percentage points to 4.75 percentage points more than Libor with lenders being offered a 100 basis-point fee on the unused portion of the revolver. The existing revolving facility pays 3 percentage points more than Libor with a 50 basis-point unused fee, Bloomberg data show. Libor is the rate banks say they can borrow in dollars from each other.
Caesars isn’t offering lenders on its B4 term loan an opportunity to extend, the person said. That portion is due in October 2016 and pays interest at 7.5 percentage points more than Libor with a 2 percent minimum on the benchmark, according to Bloomberg data. The debt was sold to investors at 97.5 cents on the dollar.
Bank of America Corp. is arranging the amendment, the person said. Term loan lenders are being asked to respond by Feb. 10 while lenders to the revolver have until Feb. 17. The deal is expected to close and fund the week of Feb. 20, according to the person.
Gary Thompson, a spokesman for Caesars, didn’t immediately respond to an e-mail seeking comment.
A term loan B is mainly bought by non-bank lenders such as collateralized loan obligations, bank-loan mutual funds and hedge funds. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.