2009-11-09 23:59:03 -
The ad hoc committee of bondholders of the Inn of the Mountain Gods Resort & Casino (the “Committee”) has been negotiating with the IMG Resort and Casino (the “Issuer”) and the Mescalero Apache Tribe (the “Tribe”) regarding restructuring the Issuer’s outstanding 12% Senior Notes due 2010 (the “Notes”). The Committee represents holders of more than two-thirds of the outstanding principal
amount of the Notes.
After some negotiations, on September 8, 2009, the Issuer proposed to the Committee an exchange of the outstanding Notes for two new series of Issuer notes (the “Proposed Exchange Notes”) which the Committee rejected. The Proposed Exchange Notes contained the following terms.
One series of Proposed Exchange Notes (the “First Out Notes”) would have been for the aggregate principal amount of $80 million, bearing a cash interest rate of 8% with a 10 year maturity, callable any time at par.
The other series of Proposed Exchange Notes (the “Second Out Notes”) would have been for the aggregate principal amount of $80 million, with a 20 year maturity, callable at par after 3 years, bearing a 5% interest rate payable in kind until the First Out Notes were repaid in full and a 10% interest rate payable in cash after the First Out Notes were repaid in full.
Under this offer, holders of the Proposed Exchange Notes would have received 100% of excess cash flow for principal repayment to the extent unadjusted EBITDA was $35 million or less. If unadjusted EBITDA exceeded $35 million, the Tribe would have received 20% of the unadjusted EBITDA above $35 million and holders of the Proposed Exchange Notes would have received the remaining excess cash flow as principal repayment.
Additionally, the Tribe would have been entitled to one-twelfth of $10 million as a monthly distribution to the Tribe with a 2.5% annual inflation escalator irrespective of EBITDA levels.
The Committee rejected the Last Issuer Offer and made a counter proposal (the “Counter Proposal”) on the following terms, which the Issuer is assumed to have rejected.
Under the Counter Proposal, holders of the Notes would have received $5 million upon completion of a Notes exchange, as reduction in principal of the outstanding Notes. In addition, the Notes would have received $50 million aggregate principal amount of First Out Notes, bearing a 9% cash interest rate with a 10.5 year maturity, callable any time at par and $145 million aggregate principal amount of Second Out Notes with a 15.5 year maturity, callable at par 3 years after payment in full of the First Out Notes, bearing a 2.5% interest rate payable in kind until the First Out Notes were repaid in full and a 13.5% interest rate payable in cash after the First Out Notes are repaid in full.
Under the Counter Proposal, holders of the Proposed Exchange Notes would have also received 100% of excess cash flow as a reduction in principal.
The Tribe would have received monthly distributions of one-twelfth of $9 million, with a CPI annual inflation escalator beginning in 2015 (which would no longer reset after payment in full of the First Out Notes). The Tribe would also have received a $1 million payment upon repayment in full of the First Out Notes and a $0.75 million payment for every $10 million of Second Out Notes that were repaid. The Counter Proposal also required additional security and financial covenants.
There can be no assurance that the Issuer and the Committee will reach agreement regarding the restructuring of the Notes or that any such agreement would be more or less favorable to the holders of the Notes than described above. Also, there can be no assurance that any such agreement would be accepted by holders of a sufficient principal amount of the Notes to effectuate a restructuring through a voluntary exchange of notes.
Media Contact:Kent Richey, 612-766-6910
