Mohegan to issue $250 million of notes to partly fund tender

By Paul Deckelman

New York, July 16 - Mohegan Tribal Gaming Authority plans to issue $250 million of new senior subordinated notes in order to partially finance the Uncasville, Conn.-based Native American gaming operator's pending tender offer for two series of existing bonds, tender documents disclosed Friday.

However, few concrete details on the upcoming offering were available, including the investment bank or banks that will be involved, the structure of the new deal and its timing.

The official offer to purchase and consent solicitation sent to the holders of the company's $200 million of 8 1/8% senior notes due 2006 and $150 million of 8 3/8% senior subordinated notes due 2011 in connection with the company's announced tender offer for those securities said that to fund the repurchase of those bonds and related costs, presumably including interest, tender premiums and fees, the Authority wants to line up a total of $400 million of financing.

Some $250 million of this would be the issue of new senior subordinated debt, while the remaining $150 million would be drawn from its existing bank credit facility. Mohegan said it would seek to amend the facility to permit the use of the bank facility funds for the repurchase of the tendered notes and the redemption of any of the notes not tendered under the offer.

Mohegan warned that if it does not raise at least $400 million in gross proceeds it will not purchase any notes tendered under the offer and will not call any notes for redemption.

The dealer managers for the tender offer at Citigroup and Banc of America. However, there was no official word Friday as to whether either or both of these banks would be involved in bringing the bond deal to market, as frequently occurs in such situations.

While the upcoming bond deal and effort to amend the credit facility were mentioned in the tender offer documents, there was no mention in the press release announcing the tender offer of any specifics beyond a general reference to the completion of the offer being subject to a financing condition.

A market source said that in all probability, Mohegan - the operator of the Mohegan Sun casino resort in Connecticut - would hold off on any official announcement of the bond deal to wait for an indication of whether current noteholders would respond to the tender offer before proceeding with the financing.

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