Caesars gets commitments to extend about $2.7 billion of term loans

By Sara Rosenberg

New York, Feb. 13 - Caesars Entertainment Operating Co. Inc. has received commitments to push out the maturity on around $2.7 billion of its term loan B-1, B-2 and B-3 debt by three years to Jan. 28, 2018 through the creation of a new term loan B-6, according to an 8-K filed with the Securities and Exchange Commission on Monday.

Upon the effectiveness of the amendment, the company will repay term loans of extending lenders in an amount equal to 40% of the principal amount of term loans elected to be extended.

Taking into account the repayment of a portion of the new term loan B-6, there will be about $1.8 billion outstanding under the tranche.

However, that $1.8 billion size does not take into account any amount of existing revolver commitments with a maturity of Jan. 28, 2014 that lenders may elect to convert into term loan B-6 debt in connection with the company's amendment and extension transaction. Caesars will repay extended term loans held by any consenting revolver lender in an amount equal to 10% of the amount of the revolver commitment that was converted.

Revolver commitments that are not converted into the term loan B-6 are hoped to be extended by three years to Jan. 28, 2017 at increased pricing. The company will then terminate 20% of the extended revolver commitments on a pro rata basis.

The existing revolver is sized at about $1.2 billion and priced at Libor plus 300 bps with a 50 bps unused fee.

The deadline to convert or extend existing revolver commitments is Feb. 17.

As was previously reported, pricing on the new B-6 loan is Libor plus 525 basis points, after flexing up earlier from talk of Libor plus 450 bps if less than $3.25 billion of the company's term loan B-1, B-2 and B-3 debt was extended and Libor plus 475 bps if more than $3.25 billion was extended.

Originally, the company was asking to extend up to $4 billion of the roughly $5 billion term loan B-1, B-2 and B-3 debt, but that number was later revised to $2.5 billion before ending up at the final tally.

Pricing on the non-extended term loan B-1, B-2 and B-3 is Libor plus 300 bps. Currently, the company also has about $1.2 billion of existing extended term loan B-5 debt due Jan. 28, 2018 that is priced at Libor plus 425 bps.

Following completion of the extension and repayment of loans, there will be around $2.1 billion of original maturity B-1, B-2 and B-3 term loans outstanding.

The term loan B-6 has a springing maturity to April 14, 2017 if more than $250 million of the company's 11¼% senior secured notes due 2017 remain outstanding on that date, and, with the amendment, the company is adding this springing maturity to its existing extended term loan B-5.

In connection with the amendment and extension, the company sold $1.25 billion of senior notes, and up to $1 billion of the proceeds are being used for the term loan paydown.

Bank of America Merrill Lynch is the lead bank on the amendment and extension offer.

Lenders were offered a 10 bps fee for consents toward the amendment, which passed last week, and a 15 bps extension fee.

Caesars is a Las Vegas-based diversified casino-entertainment company.

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