| ITEM 1.01. | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT |
New Senior Secured Credit Facility
On January 26, 2021, the Mohegan Tribal Gaming Authority d/b/a Mohegan Gaming & Entertainment (the “Company”) entered into a credit agreement (the “Credit Agreement”) among the Company, the Mohegan Tribe of Indians of Connecticut (the “Tribe”), Citizens Bank, N.A. as administrative agent, and the other lenders and financial institutions party thereto, providing for a $262.875 million senior secured revolving credit facility (the “New Senior Secured Credit Facility”). The New Senior Secured Credit Facility will mature on April 14, 2023.
The initial drawing under the New Senior Secured Credit Facility, together with the proceeds from the Notes (defined below), was used to (i) prepay all amounts outstanding under the Credit Agreement, dated as of October 14, 2016 (as amended, the “Existing Credit Agreement”), by and among the Company, the Tribe, Citizens Bank, N.A. as administrative agent, and the other lenders and financial institutions party thereto, (ii) prepay all amounts outstanding under the Loan Agreement (Main Street Priority Loan Facility), dated as of December 1, 2020 (the “Main Street Loan Agreement”), by and among the Company, the Tribe, and Liberty Bank, as lender, (iii) repay certain debt obligations of the Company to the Tribe and (iv) pay related fees and expenses. The New Senior Secured Credit Facility will otherwise be available for general corporate purposes.
The Credit Agreement contains certain customary covenants applicable to the Company and its restricted subsidiaries, including covenants governing: incurrence of indebtedness, incurrence of liens, payment of dividends and other distributions, investments, asset sales, affiliate transactions and mergers or consolidations. Additionally, the Credit Agreement includes financial maintenance covenants pertaining to total leverage, secured leverage and fixed charge coverage, as well as a minimum liquidity covenant. The Credit Agreement also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations.
Borrowings under the New Senior Secured Credit Facility will bear interest as follows: (i) for base rate loans, a base rate equal to the highest of (x) the prime rate, (y) the federal funds rate plus 50 basis points and (z) the one-month LIBOR rate plus 100 basis points (the highest of (x), (y) and (z), the “base rate”), plus a leverage-based margin of 100 to 275 basis points; and (ii) for Eurodollar rate loans, the applicable LIBOR rate (subject to a 0.75% LIBOR floor) plus a leverage-based margin of 200 to 375 basis points. The Company is also required to pay a leverage-based undrawn commitment fee on the New Senior Secured Credit Facility of between 37.5 and 50 basis points. Interest on Eurodollar rate loans is payable in arrears at the end of each applicable interest period, but not less frequently than quarterly. Interest on base rate advances is payable quarterly in arrears.
The New Senior Secured Credit Facility is fully and unconditionally guaranteed, jointly and severally, by each of Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., Northeast Concessions, L.P., Mohegan Commercial Ventures PA, LLC, Mohegan Basketball Club LLC, Mohegan Ventures-Northwest, LLC and Mohegan Golf, LLC (the “Guarantors”; and the Guarantors other than Mohegan Basketball Club LLC, the “Grantors”). The New Senior Secured Credit Facility is secured on a first priority senior secured basis by collateral constituting substantially all of the Company’s and Grantors’ assets. In the future, certain other subsidiaries of the Company may be required to become Guarantors and/or Grantors in accordance with the terms of the Credit Agreement and related loan documents.
The foregoing description of certain provisions of the New Senior Secured Credit Facility is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
New Senior Secured Notes
On January 26, 2021, the Company issued $1.175 billion in aggregate principal amount of second priority senior secured notes due 2026 (the “Notes”) in a private placement. On the same date, the Company, the Guarantors and the Tribe entered into an indenture agreement (the “Indenture”) with U.S. Bank National Association, the trustee for the Notes.
