VICI Properties Inc. completed the roughly $1.14 billion acquisition and leaseback of Harrah's Las Vegas with Caesars Entertainment Corp.
VICI also closed on the $73.6 million sale to Caesars of about 18.4 acres of land behind the LINK Hotel & Casino and Harrah's for the development of a new convention center.
Caesars will continue to operate Harrah's Las Vegas under a 15-year lease with four five-year extension options. The planned convention center will contain 300,000 square feet of meeting space, including an outdoor plaza, and under certain conditions, Caesars can require, and VICI has the option, to purchase and lease back the convention center to Caesars.
The companies also amended an agreement that gives VICI a right of first offer on any future sale-leaseback transactions involving properties acquired in Caesar's recent purchase of Centaur Holdings LLC.
VICI will partially fund the acquisition of Harrah's with the roughly $964 million of proceeds from its offering of 54,054,053 shares of its common stock.
It will also apply proceeds from a new five-year, $400 million senior secured revolving credit facility and a new seven-year, $2.2 billion first-lien senior secured term loan, which will both bear interest at the London Interbank Offered Rate plus 225 basis points.
Following the company's listing of its common stock on a national exchange and generation of gross cash proceeds of at least $500 million, the interest rate will be lowered to LIBOR plus 200 basis points. At close, the company expects to have drawn $300 million on the revolver.
Proceeds from the credit facilities will also be used to refinance the company's existing roughly $1.64 billion first-lien term loan, redeem all $312 million of its first-priority senior secured floating-rate notes due 2022, and repurchase $400 million of mezzanine debt, in addition to working capital and general corporate purposes.
Goldman Sachs Bank USA, Morgan Stanley Senior Funding Inc., Merrill Lynch Pierce Fenner & Smith Inc., Barclays Bank PLC, Citigroup Global Markets Inc. and JPMorgan Chase Bank NA were joint lead arrangers and joint book runners for the credit facilities, while Citizens Bank NA, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities and UBS Securities LLC were the co-arrangers.
Goldman Sachs Bank USA served as administrative agent.
Kramer Levin Naftalis & Frankel LLP acted as VICI's legal adviser.