Penn National Lowers Interest Rate; Mohegan Proposes Loan Terms

Penn National Gaming Inc. lowered the rate on loans it is seeking to refinance debt, while casino-owner Mohegan Tribal Gaming Authority proposed the rate on its borrowings.

Penn National cut the interest rate on a $250 million, seven-year term loan to 2.5 percentage points more than the London interbank offered rate, according to a person with knowledge of the offering who asked not to be identified without authorization to speak publicly.

The Wyomissing, Pennsylvania-based company, which plans to split into a gaming-focused real estate investment trust and a casino operator, was initially offering the loan -- part of a $1.25 billion credit facility -- at 2.75 percentage points to 3 percentage points more than Libor, the person said.

Mohegan Tribal, operator of Mohegan Sun casinos in Connecticut and Pennsylvania, is offering to pay 4.5 percentage points to 4.75 percentage points more than Libor on a $465 million, six-year term loan B, with a 1.25 percent minimum on the lending benchmark, according to a person with knowledge of that deal who asked not to be identified because the terms aren’t set. The transaction also includes a $150 million term loan A and a $100 million revolving credit line, the person said.

The price on the largest first-lien loans rose 0.08 cent to 97.65 cents on the dollar today, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index. The gauge has returned 3.6 percent this year, compared with 4.6 percent on the Bloomberg USD High Yield Corporate Bond Index.

Golden Nugget

Casino-operator Golden Nugget Inc. is seeking to borrow $550 million to refinance debt and complete its acquisition of a casino resort and hotel in Lake Charles, Louisiana. The company, which is owned by Tilman Fertitta, is seeking a $300 million, six-year term loan, a $150 million delayed-draw term loan also due in six years and a $100 million, five-year revolving credit facility, according to a person with knowledge of the offering who asked not to be identified because terms aren’t set.

Under a revolver, money can be borrowed again once it’s repaid; in a term loan, it can’t. A term loan B is sold mainly to non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds. A term loan A is sold mainly to banks.

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