Herbst lock-up agreement in jeopardy; lender waiver needed by May 28

By Caroline Salls

Pittsburgh, May 27 - Herbst Gaming, Inc.'s restructuring support lock-up agreement will be terminated if the company cannot reach a waiver agreement with consenting lenders by May 28, according to an 8-K filed with the Securities and Exchange Commission.

According to the filing, the lock-up agreement required Herbst to obtain court approval of a disclosure statement by May 21, but the company said it has not filed a plan of reorganization and related disclosure statement because it is still negotiating terms with the lock-up parties.

The parties to the lock-up agreement include lenders holding about 68% of all of the outstanding claims under the company's second amended and restated credit agreement; equityholders Edward J. Herbst, Timothy P. Herbst and Troy D. Herbst; and Terrible Herbst Inc.

Herbst said the equityholders and Terrible Herbst said they do not intend to waive the disclosure statement approval provision.

As a result, the company said it is in discussions with the consenting lenders about a waiver of the requirement and continuation of the lock-up agreement.

However, the lock-up agreement will be deemed terminated, effective May 21, unless the company and consenting lenders reach an agreement by May 28.

The Las Vegas-based casino business owns and operates 12 casinos in Nevada, two in Missouri, and one in Iowa. The company filed for bankruptcy on March 22 in the U.S. Bankruptcy Court for the District of Nevada. Its Chapter 11 case number is 09-50746.

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