Casino operator seeks cut in interest rate

Tuesday, June 7, 2005 | 10:55 a.m.

Bank of America Corp., CIBC World Markets and Wells Fargo & Co. may cut the rates on $1.85 billion of bank loans for Boyd Gaming Corp., which co-owns the Borgata Hotel Casino & Spa in Atlantic City.

Boyd Gaming wants to increase its revolving credit to $1.35 billion, from $1.1 billion, and reduce the interest rate to 1.25 percentage points more than the London interbank offered rate, said Treasurer Paul Chakmak. He said the Las Vegas-based company is paying Libor plus 1.5 percentage points on the revolving credit.

A conference call to sell the proposed loans was held on June 2, Chakmak said. Boyd Gaming also wants to cut the interest rate to Libor plus 1.5 percentage points on a $496 million term loan, from Libor plus 1.75 percentage points.

Three-month Libor, an average of rates set daily by banks and used as a borrowing benchmark, is 3.37 percent. In a revolving credit, money can be borrowed again once it's repaid; in a term loan, it can't.

Bank of America, CIBC and Wells Fargo are seeking loan commitments by June 15, a person familiar with the transaction said. The financing is expected to be completed by the end of the month, Chakmak said.

Boyd Gaming is rated Ba3 by Moody's Investors Service, three levels below investment grade. Standard & Poor's assigns a BB rating, two levels short of investment grade.

Boyd Gaming also wants to extend the maturity of the revolving credit to 2010, from 2009. CIBC is a unit of Canadian Imperial Bank of Commerce.