Placing its biggest bet to date on the casino industry, Bank of America Corp. has closed $3 billion in bank loans to help Park Place Entertainment buy Caesars World and other gaming assets from Starwood Hotels and Resorts.
The deal by the Charlotte, N.C.-based banking company, which has dominated casino lending in recent years, is the biggest bank financing ever for a U.S. gambling company.
Analysts say the move comes at a high point for the gambling industry. Its biggest companies -- Las Vegas-based Park Place is among them -- are consolidating and creating efficiencies. And the smaller ones, which tend to focus on riverboat gambling, have improved their performance.
"You have a maturing, competitive environment," said Greg Zappin, a gaming-debt analyst for Standard & Poor's. "Companies are beginning to understand their markets and filling them out. A lot of the smaller companies are doing well."
Meanwhile, Mr. Zappin said, larger players including Park Place and Harrah's Entertainment Inc. continue to diversify and come up with new resorts that appeal to a broader range of people. For instance, Park Place on Wednesday unveiled its Paris resort in Las Vegas.
Contrary to their recent run of good luck, in the early 1990s hotel and gambling companies retrenched and went heavily into debt to rebuild. At the time, few banks were willing to loan money to such companies; one that did was San Francisco-based BankAmerica Corp., which merged with NationsBank last year to form Bank of America.
Steven P. Altman, a debt analyst at Duff & Phelps, a credit rating company in Chicago, said Bank of America has won the gaming industry's loyalty through its longtime status as the biggest regional player in the West and its willingness to support the business in hard times.
Bank of America "has always held a broad portfolio of gaming companies," Mr. Altman said. "They were in the business and helped them out when other banks weren't as comfortable."
With the Park Place deal, Bank of America's relationship with the gaming industry appears to be more aggressive than ever. The banking company has managed more than $18 billion of syndicated loans and $7.6 billion of high-yield and high-grade bond issues in the category since 1996.
Bank of America is joined in the Park Place deal by Bank of Nova Scotia, Deutsche Banc Alex. Brown, and Merrill Lynch Capital Corp., all of which were documentation agents and co-arrangers. Bank of America also co-led $300 million of senior notes issued in July with Merrill Lynch & Co. and Deutsche Banc.
Park Place's deal for the properties owned by Starwood, a White Plains, N.Y., company, was announced in April and is scheduled to close in the fourth quarter, pending regulatory approval.