Riviera defaults on credit, swap agreements

By Caroline Salls

Pittsburgh, April 6 - Riviera Holdings Corp. has received a notice of default on its credit agreement from Wachovia Bank, NA, according to an 8-K filed with the Securities and Exchange Commission.

According to the filing, the default letter alleges that additional defaults have occurred in connection with covenants and debt cross-defaults since the company received a default notice on Feb. 26 for failing to comply with the administrative agents' request to provide a deposit account control agreement.

Riviera said the new defaults are based on the company's failure to deliver an audited financial statement without a going-concern qualification to the administrative agent; the company's failure to deliver a certificate of an independent certified public accountant in conjunction with its financial statement; and the occurrence of a default or breach under a secured hedging agreement.

The company said the default letter further alleges that potential events of default exist as a result of Riviera's failure to pay accrued interest on a Libor rate loan on March 30, a commitment fee due March 31 and accrued interest on alternate base rate loans due on March 31.

These non-payments were scheduled to trigger events of default if the Libor payment was not made by April 2 and the other payments were not made by April 3.

Riviera said the payments were not made by the deadlines.

At the time of the default notice, there was $225 million outstanding on the term loan portion of the credit facility and $2.5 million on the revolving credit facility.

Because of the defaults, the interest rates were increased by 2%.

In addition to the loan defaults, the company said it received a notice of default and reservation of rights from Wachovia on an ISDA master agreement.

Riviera said the swap agreement notice default was triggered by occurrence of defaults under the credit agreement and the company's failure to pay $2.15 million due in connection with one or more swap agreement transactions.

According to the 8-K, the company did not make the payment within the three-day grace period.

The company is also paying an additional 1% in default interest on the swap agreement.

As of Dec. 31, there was $30.2 million outstanding under this agreement.

Riviera owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colo.

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