The Mohegan Tribal Gaming Authority announced an agreement with its prime bankers that, among other things, gives MTGA the flexibility to consider a hotel on the site of its racetrack-slot parlor in Pennsylvania as long as MTGA follows through with its proposed borrowing of $200 million that was announced last week. Proceeds of the $200 million proposed borrowing would be used to pay down some of MTGA's debt with those primary bankers.
The following is an excerpt of MTGA's announcement:
Mohegan Tribal Gaming Authority Receives Requisite Consent to Amend Its Bank Credit Facility
UNCASVILLE, Conn., Oct. 16, 2009 (GLOBE NEWSWIRE) -- The Mohegan Tribal Gaming Authority, or the Authority, the owner and operator of a gaming and entertainment complex located near Uncasville, Connecticut, known as Mohegan Sun, and a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania, known as Mohegan Sun at Pocono Downs, or Pocono Downs, announced today that it has received the requisite consent of its bank lending group, led by Bank of America, N.A., as Administrative Agent, to amend its bank credit facility. Among other things, the Authority has received requisite consent to:
*Modify the terms of the Authority's total leverage ratio covenant to increase the covenant by 25 basis points for the quarterly periods ending March 31, 2010, June 30, 2010, June 30, 2011, September 30, 2011 and December 31, 2011, and by 50 basis points for the quarterly periods ending September 30, 2010, December 31, 2010 and March 31, 2011.
*Modify the terms of the Authority's senior leverage ratio covenant to increase the covenant by 25 basis points for the quarterly periods ending March 31, 2010 and continuing through December 31, 2011.
*Gain the ability to obtain a release from liens securing the bank credit facility of a portion of the land on which Pocono Downs is sited to permit its sale or lease to a third-party in connection with the development of a potential hotel project, consisting of a minimum of 200 rooms, subject to the satisfaction of customary conditions.
*Modify the terms of the Authority's covenant relating to its incurrence of permitted indebtedness to allow the Authority or its subsidiaries to incur additional debt (which may consist of capital lease obligations) in an aggregate amount not to exceed $55 million, at any one time outstanding, in connection with the development of the potential hotel project at Pocono Downs.
*Modify the terms of the Authority's permitted capital expenditures covenant to affirmatively allow for the existing $125 million of permitted capital expenditures to be utilized for Pocono Downs in addition to Mohegan Sun and related businesses, including the payment of licensing fees associated with those operations.
*Permanently reduce the revolving commitments by $25 million.
*Modify the terms of the applicable pricing rates. The Authority's modified rates will be as follows: (i) the applicable rate for base rate loans will be between 1.25% and 2.75%; (2) the applicable rate for Eurodollar rate loans will be between 2.50% and 4.00%; and (iii) the applicable rate for commitment fees will be between 0.20% and 0.50%.
The effectiveness of these amendments is conditioned, in part, on the consummation of the Authority's proposed offering of $200 million aggregate principal amount of second lien senior secured notes due 2017 in a private offering to be conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as described in the Authority's press release dated October 14, 2009, and satisfaction of other customary conditions.
See press release at http://www.reuters.com/article/pressRelease/idUS188744+16-Oct-2009+GNW20091016 for full details.
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