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 earliest event reported) December 27, 1999
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MTR GAMING GROUP, INC.
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(exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-20508 84-1103135
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(Commission File Number) (IRS Employer Identification Number)
STATE ROUTE 2 SOUTH, CHESTER, WEST VIRGINIA
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(Address of principal executive offices)
26034
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(Zip Code)
Registrant's Telephone Number, Including Area Code: (304) 387-5712
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N/A
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(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS.
On December 27, 1999, MTR Gaming Group, Inc. and its wholly-owned
subsidiaries, Mountaineer Park, Inc., Speakeasy Gaming of Las Vegas, Inc., and
Speakeasy Gaming of Reno, Inc. (collectively, the "Company"), entered into a new
five-year senior secured reducing revolving credit facility in the principal
amount of $30 million (the "Wells Fargo Loan") with Wells Fargo Bank, National
Association ("Wells Fargo"). The Company has drawn the full $30 million
available under the Wells Fargo Loan and used the proceeds, combined with
approximately $5.3 million of the Company's cash, to (i) prepay in full all
loans previously made to the Company by Madeleine LLC under the Third Amended
and Restated Term Loan Agreement dated April 30, 1998 ("Madeleine Loan"); and
(ii) to pay the fees and costs of the transaction with Wells Fargo.
SUMMARY OF THE WELLS FARGO LOAN
Some of the more important terms of the Wells Fargo Loan are as
follows:
a. The loan is a five-year reducing revolving
commitment.
b. For the first six months, the loan will bear interest
at the rate of approximately 9.25%. This rate is tied
to the London Interbank Offered Rate, or LIBOR, plus
3%.
c. Thereafter, subject to certain limitations described
in the Credit Agreement, as LIBOR contracts expire,
the Company may elect from time to time either to
continue to borrow on a LIBOR basis (with 1,2,3 or 6
month contracts) or to convert to an interest rate
based upon the higher of the Prime Rate and Federal
Funds Rate ("Base Rate") plus the applicable margin.
LIBOR loans will have substantial prepayment
penalties; Base Rate loans will have no prepayment
penalty.
d. Beginning on the first day of the seventh month after
closing, the interest rate will be adjusted quarterly
depending upon the Company's Total Leverage Ratio (as
defined in the Credit Agreement) in accordance with
the following table:
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BASE RATE LIBO RATE
LEVERAGE RATIO MARGIN MARGIN
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Greater than 2.50 to 1.00 1.50% 2.50%
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Greater than 2.00 to 1.00 but less than 1.25% 2.25%
or equal to 2.50 to 1.00
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Less than or equal to 2.00 to 1.00 1.00% 2.00%
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e. Beginning ninety days after closing, the maximum
available credit line will be reduced by $1.5 million
per quarter, equating to a five-year amortization.
Amounts voluntarily prepaid over and above such
scheduled facility reductions may be re-borrowed,
subject to a commitment fee ranging from 37.5 to 50
basis points depending upon the Total Leverage Ratio
(as defined in the Credit Agreement).
f. The Credit Agreement evidencing the Wells Fargo Loan
contains a number of affirmative and negative
covenants which, among other things, require the
Company to maintain certain financial ratios and
refrain from certain actions without Wells Fargo's
concurrence. Customary events of default provisions
are also included.
g. The credit agreement likewise requires the Company to
maintain at least $8 million in key man life
insurance on Edson R. Arneault throughout the term of
the loan and to prepay $4 million of the outstanding
principal in the event of Mr. Arneault's death.
h. The Credit Agreement also requires the Company to
spend a minimum of 2% and a maximum of 6% of gross
revenues on maintenance of the Company's properties.
i. The credit agreement permits the Company to incur up
to $8 million of additional senior indebtedness for
the purchase or lease of gaming equipment as well as
up to $15,000,000 of subordinated debt for capital
improvements.
j. Substantially all of the Company's assets, including
all of the capital stock of Mountaineer Park, Inc.
and, subject to the approval of the Nevada Gaming
Control Board and Nevada Gaming Commission, the
capital stock of Speakeasy Gaming of Las Vegas, Inc.
and Speakeasy Gaming of Reno, Inc., are pledged as
security for repayment of the Wells Fargo Loan.
k. The financing also involved the payment of various
fees and charges, including an up front fee to Wells
Fargo of $600,000 or 2% of the total amount financed,
a financial advisory fee to Friedman, Billings Ramsey
& Co. of $450,000 or 1.5% of the total amount
financed, and other customary fees and charges.
The foregoing summary of the Wells Fargo Loan is qualified in its
entirety by the terms of the Credit Agreement, which is filed under Item 7
below.
PREPAYMENT AND TERMINATION OF THE MADELEINE LOAN
As part of the financing with Wells Fargo, the Company simultaneously
prepaid in full the $33,391,500 of principal outstanding under the Madeleine
Loan as well as $265,000 in accrued interest and a call premium of $429,530. The
Madeleine Loan bore interest at the rate of 13% per year, payable monthly, and
was scheduled to mature in July of 2001.
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The Company and Madeleine LLC entered a Termination and Release
Agreement by which Madeleine acknowledged the Company's satisfaction of all of
its obligations under the Madeleine Loan Agreement and the release of its
security interest in any of the Company's assets.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following are filed as exhibits to this report:
EXHIBIT NO. DESCRIPTION
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10.1 Credit Agreement
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.
MTR GAMING GROUP, INC.
By: /s/ Edson R. Arneault
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Edson R. Arneault, President
Date: December 28, 1999
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