Boyd Gaming completes tender offer for Coast Hotels and Casinos 9½% notes, calls remaining notes

New York, July 1 - Boyd Gaming Corp. (B1/BB-) said it has completed its tender offer and related solicitation for the 9½% senior subordinated notes due 2009 issued by Coast Hotels and Casinos Inc. (B2/B), which is being acquired by Boyd.

The tender offer expired as scheduled at 9 a.m. ET July 1 without further extension, coinciding with the consummation of its acquisition of Coast Casinos Inc., the parent company of Coast Hotels and Casinos.

As of that deadline, $300.6 million of the notes, or 92.5% of the outstanding principal amount, had been tendered by their holders for purchase by Boyd, up slightly from the $300.5 million (statistically, also 92.5%) which had been tendered by June 9, when the company last announced noteholder participation.

Boyd accepted all notes for purchase and paid for them under the terms of the tender offer.

It also said amendments to the notes' indenture, previously approved by the noteholders, have now become operative and govern the notes, including the $24.4 million of the notes which were not tendered in the offer and which remain outstanding.

Boyd said that Coast has notified the trustee for the notes that it will redeem all of the remaining notes in full on Aug. 2 at a redemption price of $1,047.50 per $1,000 principal amount of notes plus interest accrued and unpaid up to the redemption date.

The redemption of the notes will be funded from availability under Boyd Gaming's credit facility. The paying agent for the redemption is the U.S. Bank NA in St. Paul, Minn., which will notify all remaining noteholders of procedures for the redemption.

As previously announced, Boyd Gaming - a Las Vegas-based casino operator buying Coast Casinos, also a Las Vegas casino company, in a previously announced $820 million merger expected to close in mid-2004, subject to the receipt of various regulatory and other approvals - said on May 17 that it had begun a cash tender offer and consent solicitation for any and all of the $325 million outstanding principal amount of the 9½% notes issued by Coast Hotels and Casinos. Boyd said it was also seeking Coast noteholder consent to certain proposed indenture amendments what would amend or eliminate substantially all of the restrictive covenants, certain events of default and other related provisions contained in the indentures' notes.

Boyd set a consent deadline of 5 p.m. ET May 27 and initially said the offer would expire at 9 a.m. ET June 16, which was subsequently extended.

Boyd said that it would pay total consideration of $1,051.25 per $1,000 principal amount of notes tendered and accepted for payment by the company to holders tendering their notes by the consent deadline and thus consenting to the proposed indenture changes. Total consideration would include a $20 per $1,000 principal amount consent payment. Holders tendering after the consent deadline would be eligible to receive the tender offer purchase price of $1,031.25 per $1,000 principal amount of notes but not the consent payment. Additionally, all tendering noteholders would receive accrued and unpaid interest up to but not including the applicable date of payment for their notes. The company said the settlement date would be promptly after the expiration date.

The company said holders could not tender their notes without delivering consents or deliver consents without tendering their notes. It said tenders of notes could be validly withdrawn and consents delivered could be validly revoked at any time prior to the now-passed consent deadline. It further said that holders could not validly revoke a consent unless they had validly withdrawn their previously tendered notes, and added that notes tendered after the consent deadline could not be withdrawn.

Boyd said that the tender offer and its obligation to accept notes tendered and to pay the purchase price would be subject to the satisfaction of certain conditions, including the satisfaction of certain conditions to consummate the merger between Boyd and Coast Casinos; the requirements that Boyd receive tenders of notes representing at least a majority of the outstanding principal amount of the Coast 9½% notes and then execute a supplemental indenture incorporating the desired indenture changes after their approval by the noteholders; the receipt by Boyd of financing for the tender offer (Boyd announced on May 20 that it had secured $1.6 billion of bank loans and credit facilities in connection with the merger); and other general conditions.

On May 28, Boyd said that it had received the required consents to proposed changes in the indenture of the Coast 9½% notes, with holders of $300.5 million of the notes or 92.5% of the outstanding principal amount having delivered valid tenders and consents by 5 p.m. ET May 27, when the consent solicitation expired as scheduled without extension; as of that time, under the terms of the tender offer, the condition that holders of at least a majority of outstanding notes tender their notes and deliver consents had been fulfilled.

Boyd said that although a supplemental indenture incorporating the amendments had been executed and was effective, the provisions of the supplemental indenture would not become operative until Boyd accepted notes tendered under the tender offer for payment, which was expected to occur on the same date that the merger transaction between Boyd and Coast was consummated. It said that once the provisions of the supplemental indenture become operative, they will be binding upon all of the notes, including those not tendered into the tender offer.

On June 10, Boyd said it had extended the tender offer for the Coast notes to 9 a.m. ET July 1, subject to possible extension, from the originally announced 9 a.m. June 16. It said that as of June 9, holders had tendered $300.5 million principal amount of the notes or 92.5% of the outstanding amount, unchanged from the investor participation level announced on May 27 after the consent deadline expired.

Banc of America Securities LLC (call High Yield Special Products at 888 292-0070 or collect at 704 388-4813) and Deutsche Bank Securities Inc. (call High Yield Capital Markets at 800 553-2826 or collect at 212 250-4270) are joint dealer managers and solicitation agents for the tender offer and the consent solicitation. D.F. King & Co. Inc. is the information agent (banks and brokers call collect at 212 269-5550; all others call 800 758-5378).

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