Published: January 24, 2012
Mohegan Tribal Gaming Authority Commences Debt Refinancing Transactions
UNCASVILLE, Conn. - (BUSINESS WIRE) - The Mohegan Tribal Gaming Authority, or the Authority, the owner and
operator of Mohegan Sun in Uncasville, Connecticut, and Mohegan Sun at
Pocono Downs in Wilkes-Barre, Pennsylvania, announced today that it has
commenced a series of debt refinancing transactions designed to extend
the maturity dates of the Authority's capital structure, including
private par exchange offers supported by a bondholder group holding
approximately $598 million in principal amount of the Authority's notes
and an amendment and restatement of the Authority's credit facility.
Exchange Offers for Notes
The Authority is commencing a private offer to exchange any and all of
the notes listed in the table below (the "old notes" ) held by eligible
holders for new notes (the "new notes" ) and a related solicitation of
consents to certain amendments of the old notes and the indentures
governing the old notes, in each case as set forth in the table below
(the "exchange offers" ). Eligible holders of old notes who tender their
old notes and deliver their consents prior to 5:00 p.m., New York City
time, on February 6, 2012, unless extended by the Authority (the "early
tender date" ) will receive $1,000 in principal amount of new notes for
each $1,000 of old notes exchanged plus a cash consent payment in the
amount set forth in the table below. Eligible holders of old notes who
tender their old notes and deliver their consents after the early tender
date will receive the consideration set forth in the table below. The
new notes will be fully and unconditionally guaranteed, on a joint and
several basis, by the same subsidiaries of the Authority that guarantee
the old notes.
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Consideration per $1,000
Principal Amount of Old Notes
Tendered
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Prior to the Early Tender Date
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On or After the Early Tender Date
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CUSIP/ISIN
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Outstanding
Principal
Amount
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Title of Old
Notes to be
Tendered
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Title of New
Notes to be Issued
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Minimum Participation Level(1)
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Principal Amount of New Notes for Tenders
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Cash Consideration for Consents
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Principal Amount of New Notes for Tenders
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Cash Consideration for Consents
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608328AU4/ US608328AU41
U60734AA5/ USU60734AA57
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$200,000,000
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111/2% Second Lien Senior Secured Notes due
2017
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111/2% Second Lien Senior Secured Notes due
2017
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50.1%
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$1,000
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$15
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$1,000
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$15
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608328AT7 / US608328AT77
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$250,000,000
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61/8% Senior Notes due 2013
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101/2% Third Lien Senior Secured Notes due 2016
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90%(2)
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$1,000
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$10
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$950
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$5
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608328AK6 / US608328AK68
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$250,000,000
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8% Senior Subordinated Notes due 2012
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101/2% Third Lien Senior Secured Notes due 2016
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90%(2)
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$1,000
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$10
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$950
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$5
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608328AP5 / US608328AP55
608328AN0 / US608328AN0
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$225,000,000
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71/8% Senior Subordinated Notes due 2014
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11% Senior Subordinated Toggle Notes due 2018
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75%(3)
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$1,000
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$10
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$950
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$5
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608328AR1 / US608328AR12
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$150,000,000
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67/8% Senior Subordinated Notes due 2015
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11% Senior Subordinated Toggle Notes due 2018
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75%(3)
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$1,000
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$10
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$950
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$5
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(1) The minimum participation level represents, for each series of the
old notes, the requisite percentage of such series (or of such series
taken together with another series, in the aggregate, as indicated in
the table above) that must be validly tendered into the exchange offers
and not validly withdrawn in order to satisfy the minimum tender
condition.
(2) Minimum participation level applies to the old 2012 notes and the
old 2013 notes, in the aggregate.
(3) Minimum participation level applies to the old 2014 notes and the
old 2015 notes, in the aggregate.
The exchange offers and consent solicitations will expire at 5:00 p.m.,
New York City time, on February 22, 2012 (unless extended by the
Authority) (the "expiration date" ). Tendered old notes may be validly
withdrawn at any time prior to 5:00 p.m., New York City time, on
February 6, 2012 (unless extended by the Authority), but not thereafter.
Holders of old notes accepted in the exchange offers will also receive a
cash payment equal to the accrued and unpaid interest in respect of such
old notes from the most recent interest payment date to, but not
including, the settlement date of the exchange offer.
The exchange offers are conditioned upon the valid tender (without being
withdrawn) of old notes representing at least (i) 50.1% of the
outstanding principal amount of the Authority's 11 1/2% second lien
senior secured notes due 2017 (the "old second lien notes" ), (ii) 90%,
in the aggregate, of the outstanding principal amount of the Authority's
6 1/8% senior notes due 2013 (the "old 2013 notes" ) and 8% senior
subordinated notes due 2012 (the "old 2012 notes" ), and (iii) 75%, in
the aggregate, of the outstanding principal amount of the Authority's 7
1/8% senior subordinated notes due 2014 (the "old 2014 notes" ) and 6
7/8% senior subordinated notes due 2015 (the "old 2015 notes" and
together with the old 2013 notes, the old 2012 notes and the old 2014
notes the "old unsecured notes" ). In addition, the exchange offers are
conditioned upon, among other things, the expected concurrent completion
of the first lien debt offering and credit facility amendment and
restatement described below on terms satisfactory to the Authority and
the receipt of declination letters from the National Indian Gaming
Commission with respect to the new notes.
The Authority has entered into agreements with certain holders of old
notes whereby such holders have committed to tender their notes into the
exchange offers, and not to withdraw their tenders (the "support
agreements" ). The Authority believes that, as of the date hereof, the
holders who are party to the support agreements hold approximately 48.3%
of the old 2012 and the old 2013 notes, in the aggregate, 63.9% of the
old 2014 notes and the old 2015 notes, in the aggregate, and 58.6% of
the old second lien notes.
In connection with the exchange offers, the Authority is soliciting
consents from holders of the old notes to certain proposed amendments,
which would eliminate or waive substantially all of the restrictive
covenants contained in the indentures and the old notes themselves,
eliminate certain events of default, modify certain covenants, and
modify or eliminate certain other provisions, including, in some cases,
certain provisions relating to defeasance, contained in the indentures
and the old notes. Holders who tender old notes pursuant to the exchange
offers must also deliver consents in order for their old notes to be
accepted in the exchange offers. Holders may not deliver consents with
respect to their old notes without also tendering such old notes, other
than pursuant to the retail consent solicitation as described below.
The new notes will not be registered under the Securities Act of 1933,
as amended (the "Securities Act" ) or any other applicable securities
laws and, unless so registered, the new notes may not be offered, sold,
pledged or otherwise transferred within the United States or to or for
the account of any U.S. person, except pursuant to an exemption from the
registration requirements thereof. Accordingly, the new notes are being
offered and issued only (i) to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act), (ii) to institutional
"accredited investors" (within the meaning of Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act) and (iii) outside the
United States to persons other than U.S. persons in reliance upon
Regulation S under the Securities Act. The exchange offers are being
made only by, and pursuant to, the terms set forth in an offering
memorandum and consent solicitation statement, and the information in
this press release is qualified by reference to the offering memorandum
and consent solicitation statement and the accompanying letter of
transmittal and consent.
Concurrently with the exchange offers, the Authority is soliciting
consents to the proposed amendments from all holders of old notes that
are not eligible to participate in the exchange offers (the "retail
notes" ) as of the date hereof (the "retail consent solicitation" ). The
purpose of the retail consent solicitation is to seek consents to the
proposed amendments with respect to holders of old notes who are
ineligible to participate in the exchange offers. Holders of retail
notes that validly consent in the retail consent solicitation will
receive a cash payment equal to (i) $15 per $1,000 of principal amount
of old second lien notes for consents delivered prior to 5:00 p.m., New
York City time, on February 22, 2012, (ii) $10 per $1,000 of principal
amount of old unsecured notes for consents delivered prior to 5:00 p.m.,
New York City time, on February 6, 2012, or (iii) $5 per $1,000 of
principal amount of old unsecured notes for consents delivered on or
after 5:00 p.m., New York City time, on February 22, 2012. The retail
consent solicitation will expire on the expiration date.
The retail consent solicitation is being made only to those beneficial
holders of the retail notes as of the commencement of the retail consent
solicitation who are not qualified institutional buyers, institutional
"accredited investors" or who are otherwise ineligible to participate in
the exchange offers in reliance upon Regulation S under the Securities
Act of 1933, as amended, as a non-U.S. person. The retail consent
solicitation is made only by, and pursuant to, the terms set forth in a
consent solicitation statement, and the information in this press
release is qualified by reference to the consent solicitation statement
and the accompanying letter of transmittal.
Documents relating to the exchange offers will only be distributed to
noteholders who complete and return a letter of eligibility confirming
that they are within the category of eligible holders for the exchange
offers. Eligible noteholders who desire a copy of the letter of
eligibility should either visit the website for this purpose at http://www.dfking.com/mohegan
or request instructions by sending an email to mohegan@dfking.com
or by calling D.F. King & Co., Inc. at (212) 493-6958. Documents
relating to the retail consent solicitation will only be distributed to
noteholders who are within the category of eligible investors for the
retail consent solicitation. Eligible noteholders who desire a copy of
the documents relating to the retail consent solicitation should contact
their bank or broker, or contact D.F. King & Co., Inc. by email at mohegan@dfking.com
or by phone at (212) 493-6958.
Credit Facility Amendment
In connection with the exchange offers, the Authority is seeking to
amend and restate its credit facility to, among other things, (i) reduce
the aggregate size of the facility from $675 million to $475 million,
comprised of a $200 million revolving credit facility and a $275 million
term loan, and (ii) extend the maturity date of the credit facility from
March 9, 2012 to March 31, 2015. Consummation of the credit facility
amendment and restatement is conditioned upon, among other things, the
concurrent completion of the exchange offers and the first lien debt
offering described below on terms satisfactory to the Authority in its
sole discretion.
We currently expect that, upon consummation of the amendment and
restatement, at our election, the interest rate per annum applicable to
loans under the credit facilities will be based on a fluctuating rate of
interest determined by reference to either (i) a base rate or (ii) a
Eurodollar rate, plus in either case, a margin based on our total
leverage ratio. Currently the margin for (i) the base rate loans is
expected to range from 2.25% to 3.25% and (ii) the Eurodollar rate loans
is expected to range from 3.50% to 4.50%. We also expect to pay
commitment fees on the unused portion of the revolving loans based on a
leverage-based pricing grid that will range from 0.25% to 0.50%. The
term loan portion of the credit facility is expected to amortize at a
rate of 0.25% of the principal amount thereof per fiscal quarter.
Our obligations under the credit facility will be fully and
unconditionally guaranteed, on a joint and several basis, by all of our
restricted subsidiaries. Our obligations under the credit facility will
be collateralized by liens on substantially all of our and our
restricted subsidiaries' assets, including substantially all of the
assets that comprise Mohegan Sun and Mohegan Sun at Pocono Downs.
First Lien Debt Offering
Prior to the expiration of the exchange offers, the Authority intends to
offer approximately $225 million in principal amount of new first lien
debt in a private placement transaction. The Authority intends to use
the proceeds of the new first lien debt offering to repay a portion of
the outstanding principal balance of the bank credit facility and to pay
other costs. The Authority may elect to issue the new first lien debt in
the form of first lien notes, a secured bank credit facility, or
otherwise. Certain noteholders who are party to the support agreements
have agreed to purchase the new first lien debt in the form of first
lien notes, subject to certain conditions, at the Authority's option.
The new first lien debt will not be registered under the Securities Act
or any other applicable securities laws and, unless so registered, the
new first lien debt may not be offered, sold, pledged or otherwise
transferred within the United States or to or for the account of any
U.S. person, except pursuant to an exemption from the registration
requirements thereof.
This press release is for informational purposes only and is neither an
offer to purchase nor a solicitation of an offer to sell any security
and shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offering, solicitation or sale would be
unlawful.
Wachtell, Lipton, Rosen & Katz served as legal advisor to the Authority.
About the Authority
The Authority is an instrumentality of the Mohegan Tribe of Indians of
Connecticut, or the Tribe, a federally-recognized Indian tribe with an
approximately 507-acre reservation situated in Southeastern Connecticut,
adjacent to Uncasville, Connecticut. The Authority has been granted the
exclusive authority to conduct and regulate gaming activities on the
existing reservation of the Tribe, including the operation of Mohegan
Sun, a gaming and entertainment complex located on a 185-acre site on
the Tribe's reservation. Through its subsidiary, Downs Racing, L.P., the
Authority also owns and operates Mohegan Sun at Pocono Downs, a gaming
and entertainment facility located on a 400-acre site in Plains
Township, Pennsylvania, and several off-track wagering facilities
located elsewhere in Pennsylvania. The Tribe's gaming operation at
Mohegan Sun is one of only two legally authorized gaming operations in
New England offering traditional slot machines and table games. Mohegan
Sun currently operates in an approximately 3.1 million square-foot
facility, which includes Casino of the Earth, Casino of the Sky, Casino
of the Wind, 100,000 square feet of retail space, including The Shops at
Mohegan Sun, a 10,000-seat Mohegan Sun Arena, a 350-seat Cabaret
Theatre, 100,000 square feet of meeting and convention space and the
approximately 1,200-room luxury Sky Hotel Tower. Mohegan Sun at Pocono
Downs operates in an approximately 400,000-square-foot facility,
offering traditional slot machines and table games, live harness racing
and simulcast and off-track wagering, several dining and retail options
and a bus passenger lounge. More information about the Authority and its
properties can be obtained by visiting www.mohegansun.com,
www.mohegansunpocono.com
or www.mtga.com.
Forward-Looking Statements
Some information included in this press release may contain
forward-looking statements, within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These statements can sometimes be identified by the use of
forward-looking words such as "may," "will," "anticipate," "estimate,"
"expect" or "intend" and similar expressions. Such forward-looking
information may involve important risks, uncertainties and assumptions
that could significantly affect anticipated results in the future and,
accordingly, such results may differ materially from those expressed in
any forward-looking statements made by or on behalf of the Authority.
Many of these risks, uncertainties and assumptions are beyond our
control, and may cause our actual results and performance to differ
materially from our expectations. Factors that could cause actual
results to be materially different from our expectations include, among
others, the following: the success, or lack thereof, of the refinancing
transactions described herein; our ability to complete any or all of
such transactions on the anticipated terms described herein or at all;
the financial performance of Mohegan Sun and Mohegan Sun at Pocono Downs
and our Pennsylvania off-track wagering facilities; the local, regional,
national or global economic climate, including the lingering effects of
the economic recession, which has affected our revenues and earnings;
increased competition, including the expansion of gaming in New England,
New York, New Jersey or Pennsylvania; our leverage and ability to meet
our debt service obligations and maintain compliance with financial debt
covenants; the availability of financing, including the new first lien
notes and the consummation of the exchange offers; our dependence on
existing management; our ability to integrate new amenities from
expansions to our facilities into our current operations and manage the
expanded facilities; changes in federal or state tax laws or the
administration of such laws; changes in gaming laws or regulations,
including the limitation, denial or suspension of licenses required
under gaming laws and regulations; changes in applicable laws pertaining
to the service of alcohol, smoking or other amenities offered at Mohegan
Sun and Mohegan Sun at Pocono Downs; our ability to implement
successfully our diversification strategy; an act of terrorism on the
United States; our customers' access to inexpensive transportation to
our facilities and changes in oil, fuel or other transportation-related
expenses; unfavorable weather conditions; and the factors described in
our Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission, for the fiscal year ended September 30, 2011, under
the heading "Risk Factors" and in the Authority's other filings with the
Securities and Exchange Commission. Accordingly, you should not place
undue reliance on the forward-looking statements contained in this press
release. Any forward-looking statements included in this press release
are made only as of the date of this release. The Authority does not
undertake any obligation to update or supplement any forward-looking
statements to reflect subsequent events or circumstances, except where
expressly required by law. The Authority cannot assure that projected
results or events will be achieved or will occur.
Mohegan Tribal Gaming Authority
Mitchell Grossinger
Etess, 860-862-8000
Chief Executive Officer
or
Mohegan
Tribal Gaming Authority
Mario C. Kontomerkos, 860-862-8000
Chief
Financial Officer
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