Ameristar Casinos again extends consent bid for merger, sweetens offer

By Susanna Moon

Chicago, March 25 - Ameristar Casinos, Inc. said it again extended the consent solicitation for waivers and amendments to its $1.04 billion outstanding principal amount of 7½% senior notes due 2021.

The company also increased the consent fee to $19.00 for each $1,000 principal amount, from $10.00 per $1,000 of notes, half payable right after the offer ends and the remainder payable after the merger goes through.

The amended terms of the consent solicitation also would reduce the capacity of Pinnacle, as the successor to Ameristar, to make restricted payments under the note indenture, according to a company press release.

The consent solicitation will now end at 5 p.m. ET on April 2, extended from March 27 and, before that, from March 22.

As noted before, the solicitation is in connection with the proposed acquisition of Ameristar by Pinnacle Entertainment, Inc., as noted before. The solicitation began on March 18.

The company wants noteholders to waive their right to a repurchase offer triggered by the change of control due to the planned merger and waive compliance with most covenants that would be violated as a result of the merger, according to a previous 8-K filing with the Securities and Exchange Commission.

Ameristar is soliciting the consents at the request and expense of Pinnacle under their merger plan, the filing noted.

Timeframe issues

Some investors voiced concerns with the timeframe of the solicitation and Ameristar Casinos responded by extending the offer to March 27, as reported by Prospect News on March 20.

For many investors, the custodian bank requires a consent two days in advance, and a more reasonable consent deadline would have been March 29, according to Covenant Review, an independent credit research firm.

"So we know that some of our subscribers only received the document yesterday, and today is their practical deadline to consent," Covenant Review said in a report that urged bondholders to reject the solicitation. "That is ridiculous and our subscribers have told us they are pretty angry about it."

Some investors noted that the "upcoming proposed amendment sounds pretty extreme and the consent payment sounds rather slim," the firm said.

Pinnacle Entertainment, a hospitality and entertainment company based in Las Vegas, announced in December it would acquire Las Vegas-based Ameristar Casinos. The company was expected to launch a consent solicitation to avoid a 101% offer for the Ameristar bonds, Covenant Review said.

Ameristar Casinos last tapped the tranche on April 19, 2012 when it sold $240 million of the notes (B3/B+/) at 103 to yield 6.879%.

The notes were quoted last trading in the 109.5 area, a market source said on March 20.

Bondholders may want to reject the consent for other reasons, in addition to the short consent timeframe, Covenant Review said at the time.

"Even from this short list, it is very clear that Pinnacle would get a lot of value from these covenant changes, and you get paid a pittance," Covenant Review said in the report. "Accepting this offer could send a bad signal to the banks that the new clearing price for major covenant changes is a joke."

The consents are not a condition of the acquisition. If the consent fails, Pinnacle Entertainment is expected to make Ameristar an unrestricted subsidiary under the company's indentures.

The issuer is a Las Vegas-based gaming and entertainment company.

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