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East Valley Tourist Development Authority withdraws $275 million senior secured notes offer
By Paul A. Harris
St. Louis, Aug. 7 - East Valley Tourist Development Authority has withdrawn its downsized, restructured $275 million offering of seven-year senior secured notes (B+), sources told Prospect News on Tuesday.
Tuesday night an informed source said that the use of proceeds primarily involved capital expenditures, part of which was the retirement of an existing tax-exempt bond issued in 2003 by the California State Community Development Authority to fund construction of the Fantasy Springs Resort near Palm Springs, Calif.
The tax-exempt status of that issue has been the subject of a dispute with the Internal Revenue Service, the source said, adding that, along with the present difficulties in the credit markets, the ongoing investigation proved to be an impediment to placing the senior secured notes.
Hence, in a private transaction on Monday the company raised the funds necessary to retire the tax-exempt issue, the source said, declining to elaborate upon the exact size or nature of the private transaction.
The source added, however, that the tax-exempt bonds contained debt incurrence and other covenants which placed restrictions upon the tribe's free cash.
During the time it was in the market the Merrill Lynch-led senior secured notes offer was downsized to $275 million from $290 million, and the maturity was decreased to seven years from eight years.
East Valley Tourist Development also increased the price talk to a 10½% coupon at a discount to yield 11%, from previous talk of the 9½% area.
In a prior restructuring the company withdrew a planned tranche of seven-year floating-rate notes.
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