Circus and Eldorado Joint Venture amended plan takes effect on Nov. 16

By Caroline Salls

Pittsburgh, Nov. 19 - Circus and Eldorado Joint Venture's first amended plan of reorganization took effect on Nov. 16, according to a Friday filing with the U.S. Bankruptcy Court for the District of Nevada.

The plan was confirmed on Oct. 23.

As previously reported, the joint venture, its partners and a significant holder of its 10 1/8% mortgage notes due 2012 entered into a support agreement for the restructuring of Circus and Eldorado's notes in March.

On Oct. 15, Circus and Eldorado Joint Venture requested court approval of an agreement with Black Diamond Capital Management, LLC, Bank of New York Mellon Trust Co., NA and Capital Research and Management Co. that settles plan-related issues.

As part of the settlement, each of the noteholder constituents agreed to drop its objections and support the prompt confirmation and consummation of the plan.

Settlement terms

The principal terms of the settlement include:

• Black Diamond agreed to withdraw its previous vote to reject the plan and, as a result, the mortgage note claims will be deemed to have accepted the plan;

• Black Diamond and Capital Research agreed to withdraw their requests to terminate the debtors' exclusive rights to file a plan and solicit votes; and

• Black Diamond agreed to pay the debtors $325,000 for legal fees and expenses.

Creditor treatment

Under the plan:

• Mortgage noteholders will receive a share of a cash distribution and $27.5 million of new 51/2-year senior second-lien notes if the class voted to accept the plan. If the class did not accept the plan, these creditors will receive a share of cram-down notes;

• Holders of other priority claims and other secured claims will be paid in full in cash or otherwise left unaffected;

• Holders of U.S. Foods secured claims will be paid in full in cash without interest;

• Holders of general unsecured claims will be paid in full in cash in equal quarterly installments with interest accruing at 5% from the bankruptcy filing date until the general unsecured claim is paid in full; and

• Equity interest rights will remain unimpaired.

Exit financing

In October, Circus and Eldorado received court approval to enter into a $70 million new first-lien exit financing credit agreement commitment from Wells Fargo Bank, NA.

The exit financing is a condition of the company's global settlement with Black Diamond Capital Management, LLC, Bank of New York Mellon Trust Co., NA and Capital Research and Management Co.

Wells Fargo agreed to act as arranger, underwriter and administrative agent for the five-year exit facility, which will be used to partially refinance the company's existing 10 1/8 % mortgage notes due 2012 and to pay the fees, costs and expenses incurred in connection with the refinancing and the facility.

The interest rate will be Libor plus 650 bps.

Circus and Eldorado owns and operates the Silver Legacy Resort Casino in Reno, Nev. It is a joint venture between Eldorado LLC and Galleon, Inc. The company filed for bankruptcy on May 17, 2012 under Chapter 11 case number 12-51156.

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