Majestic Star, Majestic Investor complete tenders; Majestic Star calls remaining 10 7/8% notes

New York, Oct. 7 - Majestic Star Casino LLC (B2/B) and its Majestic Investor Holdings LLC (B2/B) unit said that their respective previously announced tender offers and consent solicitations for Majestic Star's 10 7/8% senior secured notes due 2006 and Majestic Investor Holdings' 11.653% senior secured notes due 2007 expired as scheduled at 5 p.m. ET on Oct. 6, with no further extension.

As of that deadline, the companies said that there had been no further tenders of notes from the investor participation levels seen when the consent solicitation portions of the tender offers each expired at 5 p.m. ET on Sept. 25, with no further extension. As of that deadline, holders had tendered $74.639 million of the 10 7/8% notes, or 57.4% of the outstanding principal amount, and had tendered $135.477 million of the 11.635% notes, or 89.3% of the outstanding principal amount.

Both amounts represented the requisite amount of noteholder consents to proposed indenture changes, allowing Majestic Star and Majestic Investor Holdings to enter into supplemental indentures relating to their respective notes, incorporating the desired changes. The companies said that the indenture amendments took effect when they accepted the tendered notes for payment, and said that the changes are now binding on all remaining outstanding notes of each respective series.

Majestic Star further announced that it was calling for redemption all of the remaining $55.361 million of 10 7/8% notes. Those notes will be redeemed on Nov. 6 at 105.438% of their principal amount, plus accrued and unpaid interest up to, but not including, the redemption date.

It plans to fund the redemption using a portion of the proceeds of its recent sale of $260 million of new 9½% senior secured notes due 2010, which took place on Sept. 26, and an $80 million senior credit facility.

The Bank of New York will process all redemption transactions.

As previously announced, Majestic Star Casino, a Gary, Ind.-based gaming operator, announced a cash tender offer for its $130 million of outstanding 10 7/8% notes on Aug. 26, while its Majestic Investor Holdings subsidiary, along with Majestic Investor Capital Corp., concurrently announced a separate cash tender offer for Majestic Investor Holdings' $151.767 million of remaining outstanding 11.653% notes (out of the $152.6 million sold in November 2001).

The companies initially set consent deadlines for their respective offers of 5 p.m. ET on Sept. 10 and said each offer would expire at 5 p.m. ET on Sept. 24 (all of the deadlines were subsequently extended).

Majestic Star said it would offer $1,054.38 per $1,000 principal amount of the 10 7/8% notes, including a consent payment of $5 per $1,000 principal amount for holders tendering by the consent deadline; holders tendering after the consent deadline but before the tender expiration deadline will receive $1,049.38 per $1,000 principal amount. Majestic Star said it would also pay accrued interest up to but not including the date of payment.

The consent solicitation is to amend the indenture and release liens on the collateral securing the notes. The indenture amendment would eliminate substantially all the restrictive covenants and amend certain other provisions. The company said a majority would be needed to pass the changes.

Majestic Investor Holdings meantime initially said it would offer $1,050.00 per $1,000 principal amount of the 11.653% notes, including a consent payment of $5 per $1,000 principal amount for holders tendering by the consent deadline (the total consideration was subsequently raised to $1,090 per $1,000 principal amount, including the consent fee, which was also raised to $30 per $1,000 principal amount). It initially said that holders tendering after the consent deadline, but up to the tender expiration deadline would receive $1,045.00 per $1,000 principal amount (this consideration was also subsequently raised, to $1,060 per $1,000 principal amount). Majestic Investor Holdings also said it would pay accrued interest up to, but not including the date of payment.

The consent solicitation seeks to amend the indenture, terminate guarantees and release liens on the collateral securing the notes. Majestic Investor said the indenture amendment would eliminate substantially all the restrictive covenants and amend certain other provisions. It said that a majority would be needed to pass the changes and the consent of two thirds of the principal amount outstanding would be needed to release the liens.

For both offers, the companies said that tendering holders would be required to deliver consents, and consents could only be given on notes that had been tendered.

The companies said both offers were conditional on the receipt of consents and the completion of related financing transactions by Majestic Star.

Documentation is available from MacKenzie Partners, Inc. (call 800 322-2885), which was the information agent for the tender offers. The depositary was The Bank of New York.

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