Herbst Gaming gets required consents from 10¾% noteholders

New York, May 25 - Herbst Gaming Inc. (B2/B-) said it received the required amount of noteholder consents to proposed indenture changes from the holders of its outstanding 10¾% senior secured notes due 2008 as part of its previously announced tender offer for the notes.

Herbst said that the tender offer's consent solicitation expired as scheduled at 5 p.m. ET on May 24 without extension and that as of that time holders of $203.929 million of the notes, or 94%, of the outstanding $217 million principal amount had tendered their notes and had delivered their consents to the indenture changes.

Adoption of the proposed amendments required the consent of holders of at least a majority of the outstanding notes. Accordingly, Herbst Gaming and The Bank of New York, in its capacity as Trustee under the indenture, have executed a supplemental indenture incorporating the proposed amendments. However, those amendments, will not become operative until the notes are accepted for purchase by the company and payment is made to the tendering holders under the terms of the offer. Once the proposed amendments to the indenture become operative, they will be binding upon the holders of the notes, including any not tendered.

The underlying tender offer meanwhile continues and is scheduled to expire on June 10, subject to possible extension.

As previously announced, Herbst Gaming, a Las Vegas-based gaming company, said on May 13 that it had begun a cash tender offer and consent solicitation for any and all of its $217 million outstanding 10¾% notes.

It set a now-expired consent deadline of 5 p.m. ET on May 24 and said the offer would expire at 5 p.m. ET on June 10, subject to possible extension.

The company said that tendering holders would be required to consent to amendments to the proposed note indenture amendments that would, among other things, eliminate substantially all of the restrictive covenants. It said holders could not deliver consents without tendering.

The price in the tender offer will be set on June 8.

The total amount will be set according to a 50 basis points spread over the yield to maturity of the 2% U.S. Treasury note due Aug. 31, 2005, based on the call price of $1,053.75 per $1,000 principal amount on the notes' first call date of Sept. 1, 2005.

The total consideration will include a $30 per $1,000 principal amount consent payment, payable only to holders tendering by the consent deadline.

The company said the tender offer would be conditioned upon the now-fulfilled requirement of holders having tendered at least a majority of the outstanding principal amount of the notes, and the company obtaining financing on acceptable terms. High-yield market sources said the company was preparing to sell a $150 million issue of eight-year senior subordinated notes.

Lehman Brothers Inc. is dealer manager and solicitation agent (800 438-3242 or 212 528-7581). D.F. King & Co. Inc. is information agent and tender agent (800 431-9642 or 212 269-5550).

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