President Casinos creditors committee, Pinnacle agree to tender offer for President's 13%, 12% notes

By Caroline Salls

Pittsburgh, July 17 - President Casinos Inc.'s official committee of unsecured creditors entered into an agreement with Pinnacle Entertainment to make a tender offer for all of President's outstanding 13% senior exchange notes and 12% notes, according to a news release.

Pinnacle also will offer to purchase up to $2 million of other pre-bankruptcy general unsecured claims allowed as of July 12 against President Riverboat Casino-Missouri, Inc.

As previously reported, Pinnacle has agreed to acquire President Riverboat Casino-Missouri, which does business as President Casino St. Louis Riverfront, for $31.5 million subject to a working capital adjustment.

The completion of the acquisition is subject to licensing by the Missouri Gaming Commission, as well as the implementation of a reorganization plan for President Casinos and/or President Riverboat Casino-Missouri.

Members of the creditors' committee have agreed to tender their notes to Pinnacle.

According to the release, Pinnacle will begin the note tender within the next few days and will begin the offer to purchase the unsecured claims shortly thereafter.

Under the agreement with the major noteholders and other members of the creditors' committee, the offers must close by Aug. 18.

The tender offer for the notes will be at $809.07 per $1,000 original principal amount in cash, and the other offer will be at 100% of the allowed amount of each general unsecured claim.

If the two offers were fully subscribed, Pinnacle would pay $62.6 million.

At May 31, President Riverboat Casino-Missouri had a roughly $29 million cash balance and about $6 million in post-bankruptcy liabilities.

Bondholders, including Pinnacle, are expected to receive a large portion of the distribution to creditors in the final plan of reorganization.

"We're pleased to take this step to facilitate our acquisition of the President Casino St. Louis Riverfront," Pinnacle chairman and chief executive officer Daniel R. Lee said in the release.

"By acquiring these debt claims, we can help support a planned bankruptcy-court reorganization." Pinnacle said it expects the sale to close in the second half of 2006.

St. Louis-based President Casinos filed for bankruptcy on June 20, 2002 in the U.S. Bankruptcy Court for the Eastern District of Missouri. Its Chapter 11 case number is 02-53005.

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