Mohegan refinancing draws to close with term loan package, new issues

By Susanna Moon

Chicago, March 7 - The Mohegan Tribal Gaming Authority said it obtained a new $225 million term loan and amended its bank loan terms as part of a comprehensive refinancing that included private exchange offers for several series of notes.

As previously noted, the authority reduced the size of its existing credit facility by $200 million to $475 million and extended the maturity to March 31, 2015.

The facility now consists of a $400 million term loan and a $75 million revolving loan, rather than a single $675 million revolving loan, according to a press release on Wednesday.

Bank of America, NA is administrative agent for the amended bank credit facility. Bank of America Merrill Lynch, Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC and Blackstone Advisory Partners, LP are the lead arrangers and book managers.

In addition, the new $225 million term loan is due March 31, 2016 and is a "first-lien second-out" loan via Wells Fargo Gaming Capital, LLC as administrative agent, the release noted. Wells Fargo Securities, LLC, Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and Blackstone Advisory Partners, LP are the lead arrangers and bookrunners.

"We believe that this transaction demonstrates and confirms to the financial community that market-based solutions to comprehensive debt refinancings in the Native American gaming space are achievable," Bruce "Two Dogs" Bozsum, chairman of the authority's management board and Mohegan Tribal Council, said in the release.

Chief executive officer Grossinger Etess added, "We believe that, with this long-term debt capital solution in place, we are now well positioned to continue the development and expansion of the Mohegan Sun brand."

More on financing

As previously noted, the authority's exchange offers were conditioned on completion of a first-lien debt offering and the amendment and restatement of the credit facility as well as on a minimum tender condition.

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

Mohegan's $700 million credit facility was also to include a $225 million last-out, first-loss term loan (B3) that 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 was to be non-callable for two years, then callable at par.

Exchange offers

The authority also announced that it issued about $961.8 million principal amount of new notes in exchange for an equal amount of notes tendered in the private offers that expired at 5 p.m. ET on March 2.

The breakdown is as follows:

• $199.8 million of new 11½% second-lien senior secured notes in exchange for same amount of tendered 11½% second-lien senior secured notes;

• $417,771,000 of new 10½% third-lien senior secured notes due 2016 in exchange for $234,225,000 of tendered 6 1/8% senior notes due 2013 and $183,546,000 of tendered 8% senior subordinated notes due 2012; and

• $344.19 million 11% senior subordinated notes due 2018 in exchange for $203,844,000 of 7 1/8% senior subordinated notes due 2014 and $140,346,000 of 6 7/8% senior subordinated notes due 2015.

Holders also received $10.8 million in cash consent fees.

As previously noted, 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.

Offer background

The authority said on March 5 that it closed the 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.

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.

Several times 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 most recently extended both the early tender deadline and expiration of its private exchange offers and consent solicitations 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 were supported by a bondholder group holding about $598 million principal amount of the authority's notes and were meant to extend the maturity profile of its capital structure.

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 receive $1,000 principal amount of new notes and a $15 cash consent fee.

For the remaining four series of notes, holders who tendered received $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 also paid accrued interest up to but excluding the settlement date.

The retail consent solicitation was made only to those beneficial holders of the retail notes who are not qualified institutional buyers or institutional accredited investors or 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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