Premier Entertainment starts tender for 10¾% first mortgage notes

By Jennifer Chiou

New York, July 7 - Premier Entertainment Biloxi LLC said both it and indirect controlling member BHR Holdings, Inc. have begun tender offers for Premier's $160 million of 10¾% first mortgage notes due Feb. 1, 2012, according to an 8-K filing with the Securities and Exchange Commission.

The company will pay par plus accrued interest in the event-of-loss tender and will fund it with insurance recovery funds.

Expiration is Aug. 2.

BHR Holdings is offering 101% of par plus accrued interest in its offer. Expiration is also Aug 2.

On June 29, the company submitted a Hurricane Katrina recovery proposal to U.S. Bank NA, the trustee of the notes, requesting it allow Premier to use available insurance proceeds from Katrina-related insurance claims by Aug. 31 to repair, rebuild and open the Hard Rock Biloxi Hotel and Casino and to pay certain claims in addition to the notes repayment.

Premier said it intends to fully reconstruct the casino by no later than Dec. 31, 2007, to settle overdue outstanding obligations that arose both prior and subsequent to Hurricane Katrina, to fund ongoing operations during the construction period and to fund an 18 month interest reserve from which semi-annual interest payments on its notes due Aug. 1, 2006, Feb. 1, 2007 and Aug. 1, 2007.

On April 11, the company said Leucadia National Corp. would tender for all of Premier's 10¾% notes as part of an agreement to indirectly acquire an interest in Premier through the acquisition of AA Capital Equity Fund, LP and AA Capital Biloxi Co-Investment Fund, LP's interest in Premier. In the change-of-control offer, the company had said it would pay 101% in the offer.

Premier is the Biloxi, Miss.-owner of the Hard Rock Hotel and Casino Biloxi, which was severely damaged prior to opening by Hurricane Katrina.

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