Mohegan Tribal Gaming seeking new loan via Bank of America and Citibank

By Sara Rosenberg

New York, Feb. 13 - The Mohegan Tribal Gaming Authority is currently in discussions with Banc of America Securities LLC and Citibank North America, Inc. regarding the syndication of a new senior secured credit facility, according to a filing with the Securities and Exchange Commission. The facility would be comprised of a term loan and revolver and is anticipated to close in the spring of 2003.

The new facility would replace the company's existing $300 million reducing revolver due March 2004. Under the terms of the facility, the revolver was reduced to $300 million from $350 million on Dec. 31 and will continue to reduce by $50 million on the last day of each fiscal quarter.

"In the event that the Authority does not enter into this new senior secured credit facility, additional financing would be required to enable the Authority to pay all amounts outstanding under the existing bank credit facility when due," the filing said. "While management has identified other potential sources of financing, the Authority cannot assure you that such financing will be available on acceptable terms, if at all."

At Dec. 31, there was $226 million outstanding under the revolver of the Uncasville, Conn. operator of the Mohegan Sun Casino. The revolver carries an interest rate of Libor plus 238 basis points. The company has drawn on the loan primarily to fund capital expenditures related to Project Sunburst and other capital expenditure projects.

Security for the existing revolver is a lien on substantially all assets, including a leasehold mortgage on the land and improvements which comprise Mohegan Sun, and by a lien on cash operating accounts.

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