| Item 1.01 | Entry into a Material Definitive Agreement. |
On November 29, 2022, Mohegan Tribal Gaming Authority (“Mohegan” or the “Company”) entered into an agreement (the “Exchange Agreement”) with affiliates of Chatham Asset Management, LLC (collectively, “Chatham”) holding approximately $475 million in aggregate principal amount of the Company’s outstanding 7.875% senior notes due 2024 (the “Old Notes”). The Exchange Agreement provides for the exchange (the “Notes Exchange”) of the Old Notes held by Chatham for newly issued 13.25% senior unsecured notes due 2027 of the Company (the “New Notes”) at a ratio of $1,052.63 principal amount of New Notes for each $1,000 aggregate principal amount of Old Notes, plus accrued and unpaid interest on the exchanged Old Notes up to but not including the date of the Notes Exchange.
The New Notes will be guaranteed on an unsecured, senior basis by all of Mohegan’s existing subsidiaries that guarantee the Old Notes, plus certain future subsidiaries that guarantee other indebtedness of Mohegan or incur indebtedness in excess of $25.0 million. The New Notes will mature on December 15, 2027 and bear interest at a rate of 13.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year, commencing on June 15, 2023. The New Notes will be redeemable by the Company at a price equal to 100% of the principal amount thereof through June 15, 2024 and at specified, fixed premiums thereafter, in each case with accrued and unpaid interest thereon.
The Exchange Agreement provides for settlements in December 2022 and January 2023, subject to the satisfaction or waiver of the conditions set forth in the Exchange Agreement.
Pursuant to the Exchange Agreement, Chatham has agreed to deliver to the trustee for the Old Notes a written consent providing for, among other things, the amendment of certain covenants governing the Old Notes, subject to the initial settlement of the Notes Exchange, and the elimination of substantially all of the restrictive covenants and certain events of default contained in the indenture governing the Old Notes, subject to the final settlement of the Notes Exchange. A supplemental indenture relating to such amendments is expected to be entered into with the trustee in respect of the Old Notes simultaneously with the initial closing of the Notes Exchange.
The New Notes will be general unsecured senior obligations of the Company and will rank equally in right of payment with all of the Company’s other senior indebtedness from time to time outstanding and senior in right of payment to all of the Company’s indebtedness from time to time outstanding that is expressly subordinated in right of payment to the New Notes.
The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Exchange Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein. The Exchange Agreement has been included to provide information regarding its terms. It is not intended to provide any other information about the Company or its subsidiaries and affiliates. The Exchange Agreement contains representations and warranties that were made solely for the benefit of the parties to the Exchange Agreement and (i) may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts, (ii) may be subject to a contractual standard of materiality applicable to the parties that differs from what another party may view as material and (iii) may have been made only as of the date of the Exchange Agreement or as of another date or dates as may be specified in the Exchange Agreement, and information concerning the subject matter of the representations and warranties may change after the date of the Exchange Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures, if at all. Accordingly, no other person should rely upon any representations and warranties set forth in the Exchange Agreement as characterizations of the actual state of facts or condition of the Company or its subsidiaries and affiliates.
A copy of the press release issued by Mohegan on November 29, 2022 announcing the entry into the Exchange Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Special Note Regarding Forward-Looking Statements
Some information included in this Current Report on Form 8-K (the “Report”) may contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect” or “intend” and similar expressions. Such statements include, but are not limited to, statements relating to the Notes Exchange, including the timing of the closing of the transactions contemplated thereby.
