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Mohegan extends deadline on bond swap as tenders fall short

Posted 2/15/12

NEW YORK - Mohegan Tribal Gaming Authority, the operator of Mohegan Sun casinos in Connecticut and Pennsylvania, extended a deadline for a bond exchange to refinance as much as $1.1 billion of debt before a credit line matures next month.

Mohegan’s early tender deadline was extended a day to 5 p.m. in New York Feb. 14, the Uncasville, Conn.-based company said in a statement. The casino operator moved the deadline, initially set for Feb. 6, as tenders for its $500 million of notes due in 2012 and 2013 fell short of the 90 percent required in the offering. About 81.8 percent of those notes had been tendered as of Feb. 13, Mohegan said.

The casino operator is overhauling its capital structure after it warned that its failure to refinance debt last year raised “substantial doubt” about its ability “to continue as a going concern,” according to a Dec. 29 regulatory filing. Mohegan had total debt including capital leases on Sept. 30 of $1.64 billion, with $21 million in interest payments coming due on Feb. 15.

The company said holders of about $375 million in two subordinated bonds and $200 million of second-lien notes had tendered enough to meet requirements through Feb. 13.

Bond Tenders

About 97.1 percent of the second-lien notes had been tendered, more than the 50 percent needed, the company said. Bondholders had tendered 90.3 percent of its senior subordinated debt due in 2014 and $150 million of senior subordinated notes due in 2015, the company said. The requirement for the subordinated bonds is 75 percent.

Mohegan is offering to exchange the debt for new notes that have the same principal as the original debentures. While most of the new bonds would pay higher coupons, the old bonds would have “substantially” all restrictive covenants eliminated or waived, Mohegan said in a Jan. 24 statement announcing the offer. The offers expire Feb. 22 and bondholders that tender before the early deadline are given additional cash and principal value from the new notes.

Mohegan’s $250 million of 8 percent senior subordinated notes due in April rose 1.25 cents to 78.5 cents on the dollar at 1:22 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

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