Banks' growing interest in the fast-growing casino and gaming industry has pushed a syndicated credit for Mirage Resorts Inc. up to $1.75 billion from an initial $1 billion.
The revamped package, the largest yet for a casino company, includes an option to draw an additional $250 million. It was led by administrative agent BankAmerica Corp., documentation agent J.P. Morgan & Co., Canadian Imperial Bank of Commerce, and Societe Generale.
Initially slated to grow by $500 million, to $1.5 billion, the credit was so well received that it could be enlarged and still keep the lead banks' commitments below their hold targets, said William Newby, managing director of BankAmerica's media, entertainment, and gaming group.
Mirage owns and operates casino-based resorts in Nevada. The five-year revolving credit supports construction of resorts slated to open next year in Las Vegas and Biloxi, Miss., another project in Atlantic City, N.J., and the issuance of commercial paper. Proceeds also are to be used for general corporate purposes.
Syndicated loan volume for the industry hit a record $5.75 billion in 24 deals last year, according to a report issued late last month by BancAmerica Securities Inc. Volume for 1995 was also a record, at $4.3 billion for 22 deals.
The pool of banks willing to lend to casino and gaming companies rose to 26 last year from just eight in 1993, said Mike Rushmore, head of loan research for BancAmerica Securities.
That growth reflects changes both in the gaming market and in bankers' perception of it, said Gregory Zappin, an associate director at Standard & Poor's Corp. who tracks the casino and resort business.
"The view has changed since 1990," said Mr. Zappin. "Banks have gotten more comfortable with the way gambling has rolled out over the last five years."
Banks historically steered clear of the gaming industry for both financial and image-related reasons, said Mr. Newby. Atlantic City casino losses in the 1980s soured many money-center banks, while moral and ethical reservations about gambling discouraged many banks in the South.
The view that gaming was "tainted" or connected with organized crime has been at the root of much of bankers' caution, especially among foreign banks, said Mr. Newby.
Though these attitudes are changing, credit is available to only the four or five largest companies in the industry, analysts said. The leading players in gaming-such as Mirage, Harrah's Entertainment Inc., Circus Circus Inc., and Hilton International-have positioned themselves more as entertainment and resort destinations than casinos, by building more- expensive and better-designed properties.
Mirage Resorts, one of the few investment-grade competitors, is " the finest company in the industry," said Joseph V. Coccimiglio, senior gaming and lodging analyst for Prudential Securities Inc. "Every other company has some blemish of sorts. Mirage doesn't, because they sweat the details in their projects."