Penn National Gaming, Inc. (PENN: Nasdaq) announced today that it expanded its existing secured $2.15 billion of senior secured credit facilities by $1 billion. Under the original terms of the senior secured credit facilities entered into in July 2011, Penn National had the option to increase the amounts of the facilities at prevailing market rates, subject to obtaining commitments from lenders, pro forma compliance with financial covenants and other customary conditions.
The expanded credit facilities include:
- An $85 million expansion to the existing $700 million revolving credit facility due July 2016;
- A $400 million expansion to the existing $700 million five year Term Loan A due July 2016; and,
- A $515 million expansion to the existing $750 million Term Loan B due July 2018.
The expanded portions of the credit facilities incur no pre-payment penalties and were issued with no origination discount while substantially all of the other terms of the original credit facilities apply to the expanded revolver, Term Loan A and Term Loan B and the credit facilities and continue to allow for debt and equity repurchases.
Penn National is using $610 million of borrowings under the Term Loan A and Term Loan B expansions to fund its acquisition of the Harrah’s St. Louis gaming and lodging facility which it completed November 2 with remaining proceeds from the Term Loan A and Term Loan B expansions used to repay borrowings under the existing revolving credit facility and other general corporate purposes.
William J. Clifford, Chief Financial Officer of Penn National Gaming commented, “We are appreciative of our lead banks and participating banks for the confidence expressed in Penn National’s financial strength, liquidity and growing cash flows. An expansion was contemplated when we entered into the new credit facilities last year and we remain focused on actively and conservatively managing our capital structure to provide the financial flexibility to support our near- and long-term growth initiatives. Our conservative capital structure, including the credit facility expansions, positions Penn National with one of the most attractive costs of capital in the gaming industry which has allowed us to complete acquisitions such as Harrah’s St. Louis in an accretive manner. Furthermore, our leverage ratios remain well below industry averages and we continue to ensure that the Company has access to capital at rates which allow us to pursue a diverse range of opportunities to enhance shareholder value. With the opening this year of three new casinos and the addition of Harrah’s St. Louis, we will further diversify and expand our free cash flow allowing us to maintain attractive leverage ratios and high levels of liquidity.”