Legends Gaming tweaks its reorganization plan, gains court approval

By Jennifer Lanning Drey

Portland, Ore., June 10 - Legends Gaming LLC received court approval of its plan of reorganization Sunday from the U.S. Bankruptcy Court for the Western District of Louisiana after filing an amended plan that includes changes made verbally during a hearing late Friday, according to an attorney.

The amended plan specifies that the company's first-lien lenders will recover $162.1 million if the plan investor does not completely satisfy his obligations under the equity contribution and participation agreement or if he defaults on the agreement.

Otherwise, the first-lien lenders will recover $158.1 million as included in the previous plan.

In addition, the new plan increases the interest rate for first-lien lenders to Libor plus 675 basis points. The interest rate for first-lien lenders was previously Libor plus 450 bps or Base rate plus 325 bps.

As previously reported, under the plan, the company will continue to operate its two DiamondJacks hotels and casinos in Bossier City, La., and Vicksburg, Miss.

The company's chairman and manager, William J. McEnery, or his designees, will contribute $15 million in additional equity funds in exchange for new common and preferred interests in Legends Gaming, including 1,500 series A 15% preferred units and 8,300 series A voting common units.

McEnery's contribution will be used to make plan payments and to fund Legends' operations.

The roughly $162 million of first-lien lenders' claims and $72 million of second-lien lenders' claims against the company will be paid in full, with interest, as will Legends' general unsecured creditors.

Creditor treatment

Treatment of creditors will include:

• Holders of administrative claims will recover 100% in cash;

• Holders of priority claims, priority tax claims and secured tax claims will recover 100% in cash, plus interest;

• Holders of $162.1 million in first-lien lender secured claims will be paid in full, plus interest accruing at Libor plus 675 bps with a floor on Libor of 2%. If at any point the cash interest rate exceeds 1,175 bps, Legends will have the option of making the payment in kind;

• Holders of $73 million in second-lien lender secured claims will be paid in full, plus interest.

• Holders of $2.6 million in other secured claims and $3.3 million in general unsecured claims will be paid in full, plus 6% interest;

• Holders of $5.3 million in Legends management claims will receive new series B units;

• Holders of interests in the company's debtor subsidiaries will retain their interests;

• Holders of preferred interests in the parent company will receive new series B preferred units; and

• Holders of common interests in the parent company will receive new series A voting common units.

Frankfort, Ill.-based Legends Gaming owns and operates two gaming properties under the DiamondJacks Casino brand. The company filed for bankruptcy on March 11, 2008. The Chapter 11 case number is 08-10824.

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