Extended Credit Line for Red Lion - Analyst Blog
24 Junho 2013 - 1:00PM
Zacks
Hospitality company Red
Lion Hotels Corporation (RLH) recently announced the
extension of its credit line with Wells Fargo Bank which is a unit
of Wells Fargo & Co. (WFC). The new secured
facility worth $45 million will allow the company to refinance
about $38 million in maturing CMBS debt and pay expenses related to
the transaction. The balance will be utilized for general corporate
purposes and capital expenditures.
Moreover, a $10 million two-year revolving line of credit is
available under the facility. The hotelier has guaranteed 19
of its properties as security for the new agreement.
Management believes that the company’s improved balance sheet
helped it to get favorable terms and conditions related to the
Wells Fargo credit facility. As of Mar 31, 2013, Red Lion had $5.2
million in cash and $10.0 million on its line of credit. Also,
during the first quarter of 2013, Red Lion modified its existing
credit facility with Wells Fargo Bank in order to extend the
maturity period.
Following first-quarter 2013, Red Lion used a portion of the
proceeds from the sale of the Kalispell Center Mall to pay down
$8.8 million of the existing credit facility. In fact, since Jun
2011, Red Lion reduced its debt by over $58 million and purchased
$37 million of leased properties using proceeds from the sale of
assets.
The latest deal ensures more flexibility for Red Lion, including no
penalties for prepayment. As a matter of fact, management can tap
growth opportunities both at franchised and owned hotels with the
excess liquidity obtained from this facility.
Red Lion Hotels currently retains a Zacks Rank #4 (Sell). Some
casino-hotel operators with a favorable outlook include Las
Vegas Sands Corp. (LVS) and MGM Resorts
International (MGM) both carrying a Zacks Rank #2
(Buy).
LAS VEGAS SANDS (LVS): Free Stock Analysis Report
MGM RESORTS INT (MGM): Free Stock Analysis Report
RED LION HOTELS (RLH): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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