New York, July 28 (Standard and Poors/LCD) – Credit Suisse and Jefferies Finance set a Thursday afternoon bank meeting to launch their $180 million credit package for SugarHouse Casino, sources said.
SugarHouse has one of two gaming licenses awarded in Philadelphia and is constructing a casino complex on a 22-acre site on the Delaware River, two miles from downtown. The company is constructing an interim facility over the next 9-10 months that will house 1,700 slot machines. The interim facility will be integrated into the permanent complex, sources noted. Legal wrangling had delayed construction; the license was awarded in 2006 and the interim facility was originally supposed to be up and running last year.
The five-year loan package for the borrower, HSP Gaming, includes a $10 million revolving credit, a $150 million funded term loan and a $20 million delayed-draw term loan. The arrangers expect to hold the delayed-draw tranche. Informal price talk suggests a yield in the 12% area. The deal will include a 3% LIBOR floor, sources noted. The delayed-draw tranche will carry a 200 bps unused fee, while the RC unused fee is 100 bps.
The deal will be rated. In addition to a full covenant package of total-leverage, interest-coverage and minimum-EBITDA, lenders will also be covered by a $20 million debt-service reserve, according to sources. Lenders will have a security interest in the entity that holds the gaming licenses. Investors will also have a security interest in the land, although there’s a seller note on four of the 22 acres. Developer Neil Bluhm has contributed roughly $167 million of equity to date toward the interim gaming facility, which is expected to cost up to $310 million, including upfront fees for the gaming license, land acquisition and site work.
SugarHouse separately will borrow roughly $30 of equipment financing to fund purchase of the gaming machines and other equipment for the casino.
The 1.3-million-square-foot casino complex will be built on site of the former Jack Frost Sugar Refinery. The $550 million first phase comprises a casino with 3,000 slots, retail and dining outlets, and a 3,000-car garage.
Later plans call for a 500-room hotel, a 30,000-square-foot event center, and expanded dining and retail facilities.
– Chris Donnelly