B of A, Wells arrange new Harrah’s credit

Friday, June 25, 2004 | 11:06 a.m.

BLOOMBERG NEWS

Bank of America Corp. and Wells Fargo & Co. are arranging a $2.5 billion revolving credit for Harrah's Entertainment Inc., the Las Vegas-based casino owner said in a statement.

Harrah's said the banks converted a $1.1 billion revolving credit and a $900 million loan into the new financing. The loan can be increased to $3 billion if both sides agree.

Harrah's will pay a lower interest rate on the new loan than it did on the credits being replaced, based on the company's debt ratings and ratio of debt to equity. Harrah's will pay interest at 1.1 percentage points more than the London interbank offered rate, down from 1.3 percentage points.

The debt of Harrah's Operating Co., which runs the company's casinos and hotels, is rated Baa3 by Moody's Investors Service and BBB- by Standard & Poor's, the lowest investment-grade levels.

The new loan will mature in 2009. The previous credit, taken last year, was due to expire in 2008, Bloomberg records show. Harrah's officials couldn't be immediately reached for comment.

Libor is the interest rate banks charge one another on short-term borrowing. Three-month Libor was at 1.59 percent Thursday. Money in a revolving credit can be borrowed again once it's repaid.