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Monarch Announces Successful Refinancing Of Its Reducing Revolving Credit Facility
RENO, Nev. - 3/1/2004
Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (the "Company") today announced it has refinanced its reducing revolving term loan credit facility (the "Credit Facility") that was scheduled to mature on June 30, 2004.
The new Credit Facility of $50 million, which includes a $46 million payoff for the unpaid balance, replaces the original $80 million loan. The amount of the new credit Facility may be increased by up to $30 million on a one-time basis if requested by the Company before the second anniversary of the closing date. At the Company's option, borrowings under the Credit Facility can accrue interest at the agent bank's base rate (the "Base Rate") or at the London Interbank Offered Rate ("LIBOR") for one, two, three or six month periods. The rate of interest paid by the Company will include a margin added to either the Base Rate or to LIBOR that is tied to the Company's ratio of funded debt to EBITDA (1) (the "Leverage Ratio"). Depending on the Company's Leverage Ratio, this margin can vary between 0.25 percent and 1.25 percent above the Base Rate, and between 1.50 percent and 2.50 percent above LIBOR.
The Company may utilize proceeds from the new Credit Facility for working capital needs and general corporate purposes relating to the Company's Atlantis Casino Resort and for ongoing capital expenditure requirements at the Atlantis.
The Credit Facility is secured by liens on substantially all of the real and personal property of the Atlantis, and is guaranteed by Monarch. The Credit Facility contains covenants customary and typical for a facility of this nature, including, but not limited to, covenants requiring the preservation and maintenance of the Company's assets and covenants restricting the Company's ability to merge, transfer ownership of Monarch, incur additional indebtedness, encumber assets, and make certain investments. The Credit Facility also contains covenants requiring the Company to maintain certain financial ratios, and provisions restricting transfers between Monarch and its affiliates. The Credit Facility also contains provisions requiring the achievement of certain financial ratios before the Company can repurchase its common stock or pay or declare dividends.
The maturity date of the new Credit Facility is February 23, 2009. Beginning June 30, 2004, the maximum principal borrowable under the Credit Facility is reduced in equal increments of $1.625 million per quarter with the remaining balance due at the maturity date. The Company may prepay borrowings under the Credit Facility without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid under the Credit Facility may be reborrowed so long as the total borrowings outstanding do not exceed the maximum principal available. The Company may also permanently reduce the maximum principal available under the Credit Facility at any time so long as the amount of such reduction is at least $500 thousand and a multiple of $50 thousand.
The Company paid various fees and other loan costs upon the closing of the refinancing of the Credit Facility that are being amortized over the term of the Credit Facility using the straight-line method, which approximates the effective interest rate method. Management does not consider the covenants to restrict the Company's operations.
BACKGROUND
At origination in 1997, the Company had an $80 million reducing revolving term loan credit facility with a consortium of banks. Prior to the just completed refinancing, the Credit Facility was also guaranteed individually by John Farahi, Co-Chairman of the Board, Chief Executive Officer and Chief Operating Officer of Monarch and General Manager of the Atlantis; Bahram (Bob) Farahi, Co-Chairman of the Board and President of Monarch; and Behrouz Ben Farahi, Co-Chairman of the Board, Chief Financial Officer, Secretary and Treasurer of Monarch. These individuals did not provide any personal guarantees for the just completed refinancing of the Credit Facility.
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