Majestic Star Casino defaults on notes, loan after interest payment grace period ends

By Caroline Salls

Pittsburgh, Nov. 14 - The Majestic Star Casino, LLC is in default on its $300 million of 9½% senior secured notes due 2010 and $200 million of 9¾% senior notes due 2011 because it did not make the $24 million interest payment due Oct. 15 on the notes within the 30-day grace period, according to an 8-K filed with the Securities and Exchange Commission.

The interest payment failure also triggered events of default under the company's $80 million senior secured credit facility and Majestic Holdco, LLC's $63.5 million of 12½% senior discount notes due 2011, which have been pushed down to Majestic Star.

Majestic Star said it intends to enter into discussions with its secured lenders and noteholders regarding the consequences of the defaults and the financial and strategic alternatives available to the company.

In addition, the company is required to pay an additional 1% in excess of the applicable interest rates on the senior secured notes and senior notes on the overdue interest installments and an additional 2% under the credit facility.

The company is also prohibited from making some payments and investments and incurring debt.

Majestic Star is a Las Vegas-based owner and operator of casino hotels.

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