Churchill Downs secures $500 million in new debt to push back maturity to 2033, though the shift from fixed-rate notes to floating-rate revolver borrowing increases the company's sensitivity to benchmark interest rate fluctuations.
Churchill Downs extended its Term Loan B maturity to 2033 at the same SOFR+175bps spread, but the planned redemption of 5.50% fixed-rate notes with floating-rate revolver borrowing increases benchmark rate exposure.
Churchill Downs Incorporated (CHDN) has priced a $500 million senior secured term loan maturing in 2033 at SOFR plus 175 basis points. The company intends to use the proceeds to refinance existing debt and redeem $600 million in 5.50% notes due 2027, effectively extending its maturity profile while increasing exposure to floating-rate debt.
By replacing 5.50% fixed-rate notes with floating-rate revolver borrowing, the company becomes more sensitive to benchmark rate changes; every 1% increase in SOFR could add approximately $6 million to annual interest expenses.
The proceeds are intended to repay existing Term Loan B and revolving loans, cover transaction costs, and provide the company with more time to generate cash for operations by pushing maturity out to 2033.