Mohegan wraps private exchange offers for notes after lowering floor

By Susanna Moon

Chicago, March 5 - The Mohegan Tribal Gaming Authority said it closed its private exchange offers and consent solicitations after holders tendered $961.8 million of the notes.

At final tally, holders had tendered $199.8 million of the 11½% second-lien senior secured notes due 2017; a total of $417.8 million of the 8% senior subordinated notes due 2012 and 6 1/8% senior notes due 2013 combined; and a total of $344.2 million of the 7 1/8% senior subordinated notes due 2014 and 6 7/8% senior subordinated notes due 2015 combined.

The authority accepted all the tendered notes and expects to settle the notes "promptly," according to a news release.

On Feb. 29 Mohegan lowered the minimum condition in the private exchange offers and consent solicitations for its 6 1/8% notes and 8% notes to the amounts already tendered by that date. The withdrawal deadline had passed.

Previously, the casino operator said it had received enough tenders to satisfy the minimum tender threshold for its 11½% notes and for its 7 1/8% notes and 6 7/8% notes combined, but not for its 8% notes and 6 1/8% notes combined.

The authority also extended both the early tender deadline and expiration of its private exchange offers and consent solicitations by three more days to 5 p.m. ET on March 2. The early tender deadline was extended eight times because the authority failed to get enough tenders to satisfy the minimum amount for the offer.

As amended, the offers were conditioned on the receipt of tenders for at least 50.1% of the 11½% notes, at least 83.5% of the 6 1/8% and 8% notes combined and at least 75% of the 7 1/8% and 6 7/8% notes combined. The minimum condition for the 6 1/8% and 8% notes combined was lowered from 90%.

The authority also, at one point, pushed back the early tender deadline to coincide with the offers' original expiration time, 5 p.m. ET on Feb. 22. The early tender date was originally set for Feb. 6. The exchange offers began on Jan. 24.

As previously noted, the offers are supported by a bondholder group holding about $598 million principal amount of the authority's notes and are meant to extend the maturity profile of its capital structure.

The authority will issue new notes in exchange for the notes as follows:

• 11½% second-lien senior secured notes due 2017 in exchange for its $200 million of 11½% second-lien senior secured notes due 2017;

• 10½% third-lien senior secured notes due 2016 in exchange for its $250 million of 6 1/8% senior notes due 2013 and $250 million of 8% senior subordinated notes due 2012; and

• 11% senior subordinated toggle notes due 2018 in exchange for its $225 million of 7 1/8% senior subordinated notes due 2014 and $150 million of 6 7/8% senior subordinated notes due 2015.

Consent solicitations

The authority solicited consents to eliminate or waive substantially all of the restrictive covenants contained in the note indentures, eliminate some events of default, modify some covenants and modify or eliminate other provisions, including provisions relating to defeasance.

Holders who tendered notes needed to deliver consents and vice versa.

The authority also sought consents to the proposed amendments from all holders who are not eligible to participate in the exchange offers in the retail consent solicitation.

Exchange amounts

As previously noted, holders who tendered their 11½% notes will receive $1,000 principal amount of new notes and a $15 cash consent fee.

For the remaining four series of notes, holders who tendered will receive $1,000 principal amount of new notes and a $10 cash consent fee. Before the early tender date was extended to coincide with the expiration, holders who tendered these notes after the early tender date would have received $950 principal amount of new notes and a $5 cash consent fee.

The authority will also pay accrued interest up to but excluding the settlement date.

Withdrawal rights expired at 5 p.m. ET on Feb. 6.

Financing

The authority previously said it would amend and restate its credit facility to reduce its total size to $475 million from $675 million and extend the maturity date to March 31, 2015 from March 9, 2012.

In addition to the minimum tender condition, the exchange offers were conditioned on the completion of a first-lien debt offering and the amendment and restatement of the credit facility.

On Feb. 29 Mohegan downsized its revolving credit facility due March 31, 2015 to $75 million from $200 million and upsized its term loan A due March 31, 2015 to $400 million from $275 million.

Pricing is expected to range from Libor plus 350 basis points to 450 bps, based on leverage. The revolver unused fees will range from 25 bps to 50 bps.

Mohegan's $700 million credit facility also includes a $225 million last-out, first-loss term loan (B3) that is priced in line with initial talk at Libor plus 750 bps with a 1.5% Libor floor and an original issue discount of 98.

The last-out term loan is non-callable for two years, then at par.

The new notes are being offered only to qualified institutional buyers under Rule 144A and to institutional accredited investors or to those other than U.S. investors under Regulation S.

The retail consent solicitation is being made only to those beneficial holders of the retail notes who are not qualified institutional buyers, institutional accredited investors or who are otherwise ineligible to participate in the exchange offers.

The information agent is D.F. King & Co., Inc. (212 493-6958, mohegan@dfking.com or dfking.com/Mohegan).

The authority is an Uncasville, Conn., operator of gaming and entertainment enterprises.

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