Mohegan Tribal Gaming begins exchange offer for five series of notes

By Susanna Moon

Chicago, Jan. 25 - The Mohegan Tribal Gaming Authority said it negotiated private par exchange offers supported by a bondholder group holding about $598 million principal amount of its notes in an effort to extend the maturity dates of its capital structure.

The authority will issue new notes in exchange for five series of 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 for its $250 million of 6 1/8% senior notes due 2013;

• 10½% third-lien senior secured notes for its $250 million of 8% senior subordinated notes due 2012;

• 11% senior subordinated toggle notes due 2018 for its $225 million of 7 1/8% senior subordinated notes due 2014; and

• 11% senior subordinated toggle notes due 2018 for its $150 million of 6 7/8% senior subordinated notes due 2015.

Under the offer terms, holders must tender at least 50.1% of the 11½% notes, at least 90% of the 6 1/8% notes and the 8% notes combined and at least 75% of the 7 1/8% notes and the 6 7/8% notes total.

The authority is also soliciting consents to amend the five series of notes under the offer.

Mohegan is seeking to eliminate or waive substantially all of the restrictive covenants contained in the notes, eliminate events of default, modify covenants or eliminate other provisions, including provisions relating to defeasance, according to a press release.

Holders who tender notes must also deliver consents, and holders may not deliver consents without tendering the notes.

Purchase price and consents

Holders who tender their notes and deliver their consents by 5 p.m. ET on Feb. 6 will receive par amount of new notes for each $1,000 of notes exchanged plus a cash consent payment of $15.00 for each $1,000 of 11½% notes and $10.00 for each $1,000 of the other note series.

Holders who tender their notes after the early date will receive $950 for each $1,000 principal amount of 6 1/8% notes, 8% notes, 7 1/8% notes and 6 7/8% notes exchanged plus a consent fee of $5.00.

Holders who exchange their 11½% notes for new notes will receive par amount of new notes plus a $15.00 consent fee regardless of whether they tender their notes before or after the consent date.

The exchange offers and consent solicitations will expire at 5 p.m. ET on Feb. 22. Tendered notes may be withdrawn before the consent deadline.

The authority also will pay accrued interest up to but not including the settlement date.

The exchange offers also are conditioned on the completion of the first-lien debt offering and credit facility amendment and restatement.

As of Jan. 25, the authority said it secured the support of holders of about 48.3% of the old 2012 and 2013 notes combined, 63.9% of the 2014 notes and 2015 notes combined and 58.6% of the second-lien notes.

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.

Holders may request instructions by calling D.F. King & Co., Inc. at 212 493-6958 or by e-mail at mohegan@dfking.com or get more information online at dfking.com/Mohegan.

In connection with the exchange offers, the authority is seeking to amend and restate its credit facility to reduce the total size of the facility to $475 million from $675 million and to extend the maturity date of the credit facility to March 31, 2015 from March 9, 2012.

The authority also expects to offer about $225 million principal amount of new first-lien debt in a private placement with proceeds slated to repay a portion of the outstanding principal balance of the bank credit facility.

Mohegan said on Dec. 30 that it obtained a waiver from its bank group addressing the "going concern" opinion issued by auditors in connection with Mohegan's 2011 financial statements.

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

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