Herbst Gaming completes 10¾% tender offer

New York, June 14 - Herbst Gaming Inc. (B2/B-) said that its tender offer for its outstanding 10¾% senior secured notes due 2008 and related consent solicitation expired as scheduled at 5 p.m. ET on June 10, without extension.

The company said that as of that deadline, it had received tenders of $210.929 million of the notes, or about 97%, of the outstanding principal amount. Herbst said that it had accepted for payment and had paid for all of the tendered notes and said that the proposed indenture amendments noteholders had been asked to consent to had become effective.

Herbst also said it had completed a previously announced private placement offering of $160 million new 8 1/8% senior subordinated notes due 2012 and had entered into a new $150 million credit facility with a syndicate of lenders that provides for a $90 million revolving credit facility and a $60 million term loan. Proceeds from the note sale and credit facility borrowings, along with cash on hand, are to be used to purchase the 10¾% notes and pay related transaction fees and expenses. The company also plans to use a portion of the total proceeds to fund a distribution to its stockholders.

As previously announced, Herbst Gaming, a Las Vegas-based gaming company, said on May 13 that it had begun a cash tender offer and consent solicitation for any and all of its $217 million outstanding 10¾% notes.

It set a consent deadline of 5 p.m. ET on May 24, and said the offer would expire at 5 p.m. ET on June 10, subject to possible extension.

The company said that tendering holders would be required to consent to amendments to the proposed note indenture amendments that would, among other things, eliminate substantially all of the restrictive covenants, certain events of default and amended defeasance provisions contained in the indenture. It said holders could not deliver consents without tendering.

The company said the price for the tender offer would be set on June 8.

It said the total amount would be set according to a 50 basis points spread over the yield to maturity of the 2% U.S. Treasury note due Aug. 31, 2005, based on the call price of $1,053.75 per $1,000 principal amount on the notes' first call date of Sept. 1, 2005.

The total consideration would include a $30 per $1,000 principal amount consent payment, payable only to holders tendering by the consent deadline.

On May 25, Herbst said it had received the required consents to the proposed indenture changes. The consent solicitation expired as scheduled at 5 p.m. ET on May 24 without extension, and that as of that time, holders of $203.929 million of the notes, or 94%, of the outstanding $217 million principal amount, had tendered their notes and had delivered their consents.

Adoption of the proposed amendments required the consent of holders of at least a majority of the outstanding notes. Accordingly, Herbst Gaming and The Bank of New York, in its capacity as Trustee under the indenture, executed a supplemental indenture incorporating the proposed amendments, but the company said that those amendments would not become operative until the notes were accepted for purchase by the company and payment was made to the tendering holders under the terms of the offer. It said that once the proposed amendments to the indenture had become operative, they would be binding upon the holders of the notes, including any not tendered.

Conditions of the tender offer include a now-fulfilled requirement that holders tender at least a majority of the outstanding principal amount of the notes, and that the company obtain financing on acceptable terms. (Herbst sold an upsized $160 million offering of new 8 1/8% senior subordinated notes due 2012 on May 27).

On June 8, Herbst said it set the price it was offering for the 10¾% notes, using the previously announced formula, with total consideration set at $1,148.32 per $1,000 principal amount, including the $30 per $1,000 consent payment for holders who tendered before the consent deadline, and tender offer consideration for those tendering after the consent deadline set at $1,118.32 per $1,000 principal amount; all tendering holders would also receive accrued and unpaid interest on the notes up to, but not including, the expected Jan. 11 payment date.

Lehman Brothers Inc. was the dealer manager and solicitation agent (800 438-3242 or call collect or 212 528-7581). D.F. King & Co. Inc. was the information agent and tender agent (800 431-9642 or call collect 212 269-5550).

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.