UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 30, 1997
MONARCH CASINO & RESORT, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-22088 88-0300760
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of Incorporation)
1175 W. Moana Lane, Suite 200
Reno, Nevada 89509
(Address of principle executive offices and Zip Code)
Registrant's telephone number, including area code: (702) 825-3355
Item 5. Other Events.
REFINANCING OF LONG-TERM DEBT. On December 30, 1997, Monarch Casino & Resort,
Inc. ("Monarch"), through a wholly-owned subsidiary, Golden Road Motor Inn,
Inc. ("Golden Road", and together with Monarch the "Company"), completed the
refinancing of its long-term debt through a new $80 million construction and
reducing revolving bank credit facility (the "Credit Facility") arranged and
underwritten by Wells Fargo Bank, N.A. (the "Agent Bank"). The Credit
Facility replaces approximately $33 million in existing long-term debt, and
provides additional funds which the Company may use as a source of funding for
the next phase of expansion of the Company's Atlantis Casino Resort (the
"Atlantis") in Reno, Nevada.
THE CREDIT FACILITY. The Credit Facility is a direct obligation of Golden
Road, and is guaranteed by Monarch. The Credit Facility is also guaranteed by
John Farahi, Co-Chairman of the Board, Chief Executive Officer and Chief
Operating Officer of Monarch and Golden Road and General Manager of the
Atlantis; Behrouz Ben Farahi, Co-Chairman of the Board, Chief Financial
Officer, Secretary and Treasurer of Monarch and Golden Road; and Bahram (Bob)
Farahi, Co-Chairman of the Board and President of Monarch and Golden Road,
individually.
Under the terms of the Credit Facility, the Company has until August 1, 1998
to determine whether or not it will proceed with its planned expansion of the
Atlantis (the "Expansion Project"). The Company may elect to proceed with the
Expansion Project at any time prior to August 1, 1998 by providing the Agent
Bank with certain additional information and loan documentation; submitting
certain construction plans, schedules and budgets to the Agent Bank for
approval; and requesting a construction draw under the Credit Facility. If
the Company elects to proceed with the Expansion Project, the maximum
available borrowings under the Credit Facility will be $80 million, and once
this election is made, additional draws under the Credit Facility may be used
only for construction of the Expansion Project until the Expansion Project is
completed. Draws for the Expansion Project will be subject to the
satisfaction of various conditions typically applicable to construction loans.
Following completion of the Expansion Project, the Company may utilize
proceeds from the Credit Facility for working capital needs and general
corporate purposes relating to the Atlantis and for ongoing capital
expenditure requirements at the Atlantis.
Also at any time prior to August 1, 1998, the Company may elect not to
construct the Expansion Project by providing an irrevocable written notice to
the Agent Bank. The Company will also automatically be deemed to have elected
not to construct the Expansion Project if it fails to proceed with the
Expansion Project as described above by August 1, 1998. If the Company elects
not to proceed with the Expansion Project, the maximum available borrowings
under the Credit Facility will be reduced to $37.5 million and the
construction provisions of the Credit Facility will be nullified.
At the Company's option, borrowings under the Credit Facility can accrue
interest at a rate designated by the Agent Bank as its base rate (the "Base
Rate") or at the London Interbank Offered Rate (LIBOR) for one, two, three or
six month periods. The rate of interest paid by the Company will include a
margin added to either the Base Rate or to LIBOR that is tied to the Company's
ratio of funded debt to EBITDA (the "Leverage Ratio"). Depending on the
Company's Leverage Ratio, this margin can vary between 0.00 percent and 2.00
percent above the Base Rate, and between 1.50 percent and 3.50 percent above
LIBOR.
The maturity date of the Credit Facility is June 30, 2004. If the Company
elects to proceed with the Expansion Project, the maximum principal available
under the Credit Facility will reduce quarterly (commencing on July 1, 2000)
from $80 million by an aggregate of $40 million in increasing increments
ranging from $1.5 million to $6 million. If the Company elects not to
construct the Expansion Project, the maximum principal available under the
Credit Facility will reduce quarterly (commencing on October 1, 1998) from
$37.5 million by an aggregate of $19.1 million in increasing increments
ranging from $.6 million to $1.0 million. The Company may prepay borrowings
under the Credit Facility without penalty (subject to certain charges
applicable to the prepayment of LIBOR borrowings prior to the end of the
applicable interest period) so long as the amount repaid is at least $200
thousand and a multiple of $10 thousand. Following completion of the
Expansion Project, or following an election by the Company not to construct
the Expansion Project, amounts prepaid under the Credit Facility may be
reborrowed so long as the total borrowings outstanding do not exceed the
maximum principal available. The Company may also permanently reduce the
maximum principal available under the Credit Facility at any time so long as
the amount of such reduction is at least $500 thousand and a multiple of $50
thousand.
The Credit Facility is secured by liens on substantially all of the real and
personal property of Golden Road, as well as by the aforementioned guarantees.
The Credit Facility contains covenants customary and typical for a facility of
this nature, including, but not limited to, covenants requiring the
preservation and maintenance of the Company's assets (including provisions
requiring that a minimum amount equal to 2 percent of the Company's gaming
revenues each year must be expended on capital expenditures at the Atlantis),
and covenants restricting the Company's ability to merge, transfer ownership
of Golden Road, incur additional indebtedness, encumber assets, and make
certain investments. The Credit Facility also contains covenants requiring
the Company to maintain certain financial ratios, and provisions restricting
transfers between Golden Road and Monarch and between Golden Road and other
specified persons. The Credit Facility also contains provisions requiring the
achievement of certain financial ratios before the Company can repurchase its
common stock or pay or declare dividends.
Following completion of the Expansion Project, or following an election by the
Company not to construct the Expansion Project, the Credit Facility also
provides for Wells Fargo Bank to make certain swingline loans to the Company
generally to provide short-term financing pending the funding of a draw by the
Lenders under the Credit Facility. Such swingline loans will accrue interest
at the Base Rate in the same manner as other borrowings under the Credit
Facility.
The Company paid various fees and other loan costs upon the closing of the
Credit facility that will be amortized over the term of the Credit Facility.
Following completion of the Expansion Project, or following an election by the
Company not to construct the Expansion Project, the Company will be required
to pay a fee equal to three eighths of one percent per annum on the average
unused portion of the Credit Facility.
The Company's previous bank loan facility was terminated prior to maturity in
connection with the closing of the Credit Facility. As a result, the Company
will incur an extraordinary pre-tax non-cash charge of approximately $280
thousand during the 1997 fourth quarter to reflect the accelerated write-off
of unamortized deferred financing costs.
Item 7. Financial Statements and Exhibits
(a) and (b) Financial Statements and Pro Forma Financial Information.
None
(c) Exhibits
Exhibit
Number Description
------- -----------
10.01 Construction and Reducing Revolving Credit Agreement,
dated as of December 29, 1998, among Golden Road
Motor Inn, Inc. as Borrower, Monarch Casino & Resort,
Inc., John Farahi, Bahram Farahi, and Behrouz Farahi
as guarantors, the Lenders as defined therein, and
Wells Fargo Bank as administrative and collateral
Agent for the Lenders and Swingline Lender.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MONARCH CASINO & RESORT, INC.
(Registrant)
Date: January 14, 1998 By: /s/ Ben Farahi
Ben Farahi
Co-Chairman of the Board,
Chief Financial Officer
Secretary and Treasurer
EXHIBIT INDEX
Exhibit
Number Description Method of Filing
- -----------------------------------------------------------------------------
10.01 Construction and Reducing Revolving Filed
Credit Agreement, dated as of December electronically
29, 1998, among Golden Road Motor Inn, herewith
Inc. as Borrower, Monarch Casino & Resort,
Inc., John Farahi, Bahram Farahi, and
Behrouz Farahi as guarantors, the Lenders
as defined therein, and Wells Fargo Bank
as administrative and collateral Agent for
the Lenders and Swingline Lender.