XML 33 R15.htm IDEA: XBRL DOCUMENT v3.2.0.727
Subsequent Events
3 Months Ended
May. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events
On July 7, 2015, Eldorado Limited Liability Company (“ELLC”), an approximately 96%-owned subsidiary of ERI and the owner of a 50% membership interest in the Silver Legacy Joint Venture, and Circus Circus Casinos, Inc. and Galleon, Inc., subsidiaries of MGM Resorts International, entered into a purchase and sale agreement (the “ERI Purchase Agreement”) with respect to ERI's acquisition of (i) all of the assets and properties of Circus Circus Reno and (ii) the 50% membership interest in the Silver Legacy Joint Venture owned by Galleon, Inc. (collectively, the “Circus Reno/Silver Legacy Purchase”). ERI has unconditionally guaranteed the purchasers’ obligations under the ERI Purchase Agreement. ERI currently has an indirect 48.1% interest in the Silver Legacy Joint Venture.  In connection with the consummation of the Circus Reno/Silver Legacy Purchase, ERI also expects to acquire the 1.9% indirect interest in the Silver Legacy Joint Venture held by certain affiliates of ERI.  Following the consummation of the foregoing transactions, the Silver Legacy Joint Venture will be a wholly owned indirect subsidiary of ERI. 
The proposed purchase price is $72.5 million, subject to a customary working capital adjustment, and the assumption of amounts outstanding under the Silver Legacy Joint Venture credit facility, of which approximately $60 million was outstanding at March 31, 2015 on a net basis.  ERI will deposit $3 million in escrow, which it will surrender in the event the proposed acquisitions fail to close for reasons other than a breach by Circus Circus Casinos, Inc. or Galleon, Inc.  The balance of the purchase price will be payable in cash at the closing.  The Circus Reno/Silver Legacy Purchase is not subject to a financing condition and ERI does not have a financing commitment to fund the acquisition.  The consummation of the transactions contemplated is subject to the satisfaction of certain conditions, including the approval of various gaming authorities.  The Circus Reno/Silver Legacy transaction is expected to be consummated by the end of 2015, but there can be no assurance that the proposed acquisition will be consummated or as to the date by which the proposed acquisition will be consummated. The Company is unable to determine at this time the impact on the Company if the transactions contemplated by the Circus Circus/Silver Legacy Purchase are consummated.
In addition, ERI is undertaking a series of transactions to refinance its outstanding indebtedness. On July 13, 2015, ERI announced that it has commenced cash tender offer and consent solicitations for any and all of the $168.0 million in aggregate principal amount of outstanding 8.625% Senior Secured Notes due 2019 issued by ERI's wholly owned subsidiaries Eldorado Resorts LLC and Eldorado Capital Corp. (the "Eldorado Notes") and for any and all of the $560.7 million in aggregate principal amount of outstanding 11.50% Senior Secured Second Lien Notes due 2019 issued by ERI's wholly owned subsidiary MTR Gaming Group, Inc. (the "MTR Notes" and, together with the Eldorado Notes, the "ERI Notes"). Subsequently, on July 14, 2015, ERI filed a registration statement relating to a proposed common stock offering with a maximum aggregate offering price of $80 million, excluding the exercise of any overallotment option. ERI intends to use the net proceeds of the offering, together with borrowings under a proposed new $425 million term loan facility, proceeds from the sale of new senior notes, borrowings under ERI's proposed new $150 million revolving credit facility and cash on hand, to (i) purchase or otherwise redeem all of the outstanding ERI Notes (ii) pay the purchase price for the Circus Reno/Silver Legacy Purchase and repay all amounts outstanding under the current Silver Legacy Joint Venture credit facility, and (iii) pay fees and costs associated with such transactions. There can be no assurance that the refinancing transactions will be consummated or, if they are, as to the terms upon which they are ultimately consummated. The Company is unable to determine at this time the impact on the Company if the proposed refinancing of ERI's outstanding indebtedness is successfully concluded.