LONG-TERM DEBT	6 Months Ended
Jun. 30, 2020
LONG-TERM DEBT
LONG-TERM DEBT	NOTE 6. LONG-TERM DEBT On July 20, 2016, the Company entered into an amended and restated credit facility agreement (the “Amended Credit Facility”). Under the Amended Credit Facility, the Company’s available borrowing capacity was $250.0 million, and the maturity date was July 20, 2021. At December 31, 2019, the total revolving loan commitment under the Amended Credit Facility was automatically and permanently reduced to $50.0 million and all $200.0 million (Conversion Amount) outstanding under the revolving loan was converted to a Term Loan. Prior to the conversion, the Company drew all available borrowings up to $200.0 million. Following the conversion to a Term Loan, on December 31, 2019, the Company made a $3.8 million mandatory principal payment. As of June 30, 2020, the Company had an outstanding principal balance of $191.3 million under the Amended Credit Facility term loan. As of June 30, 2020, the Company had $16.0 million outstanding and $34 million remaining in available borrowings under the Amended Credit Facility revolving loan. The Company has a $0.6 million Standby Letter of Credit, from which there have been no withdrawals. Borrowings are secured by liens on substantially all of the Company’s real and personal property. In addition to other customary covenants for a facility of this nature, as of June 30, 2020, the Company is required to maintain a Total Leverage Ratio (at any time, the ratio of (a) Total Funded Debt at such time, to (b) EBITDA for the four consecutive fiscal quarter period most recently ended for which Financial Statements are available, as defined in the Amended Credit Facility) of no more than 3.5:1 and a Fixed Charge Coverage Ratio (for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date (a) the sum of (i) EBITDA minus (ii) income taxes paid in cash during such period minus (iii) Distributions made during such period (other than Distributions made pursuant to Section 5.02(f)(i)) minus (iv) Investments in Excluded Subsidiaries made during such period minus (v) Maintenance Capital Expenditures made during such period divided by (b) Fixed Charges for such period, as defined in the Amended Credit Facility) of at least 1.15:1. As of June 30, 2020, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 5.2:1 and 1.7:1, respectively. The interest rate under the Amended Credit Facility is LIBOR plus a margin ranging from 1.00% to 2.50%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00% to 1.50%, or the Prime Rate. The applicable margins vary depending on Company’s leverage ratio. The Company may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid may be re-borrowed so long as the total borrowings outstanding do not exceed the maximum principal available. On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of the total revolving loan commitment, provided that each such increase is equal to $15.0 million or an integral multiple of $1.0 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $75.0 million. The Company is required to make principal payments on the amount of the Term Loans on each Term Loan Installment Date (last business day of each quarter, starting with the quarter ending December 31, 2019) in an amount equal to (x) the percentage set forth opposite the applicable year during which such Term Loan Installment Date occurs multiplied by (y) the Conversion Amount. The estimated amount of the mandatory principal payment due in the next twelve months is $25.0 million. In relation to the COVID-19 pandemic closure of the Company’s properties, the Company and the lender executed, on June 9, 2020, A Limited Waiver and Amendment to Credit Agreement. The lender agreed to waive any default or event of default under the Amended Credit Facility resulting from (i) the failure to have the Atlantis Casino Resort or the Monarch Casino Black Hawk open and operating during the period commencing on April 1, 2020 and ending on September 30, 2020; (ii) the construction of the Monarch Black Hawk Expansion being stopped at any time prior to September 30, 2020; and (iii) the occurrence of a material adverse change on or prior to September 30, 2020, as a result of a mandated business cessation order. The lender also agreed to waive any default on the financial covenants under the Amended Credit Facility for a period commencing on April 1, 2020 and ending on September 29, 2020. The Amended Credit Facility was amended by adding a new definition, “Operational Liquidity”, to the Amended Credit facility. Operational Liquidity as defined is, as of any date of determination, the amount by which (a) (i) the Unused Revolving Commitment as of such date, plus (ii) cash (including cage cash) as of such date exceeds (b) (i) $24,000,000 minus (ii) any retainage costs with respect to the expansion project and any settlement or judgment under the PCL Litigation paid in cash; provided that from and after the Monarch Black Hawk expansion project completion date, the receipt of a final certificate of occupancy (or its local equivalent) for the expansion project and the final resolution or disposition of the PCL Litigation, the amount in clause (b) shall be deemed to be zero. The Borrowers shall not permit Operational Liquidity to be less than $25,000,000 at any time. In addition, any borrowing under the Amended Credit Facility, greater than $26,000,000 shall be used solely to pay retainage costs with respect to the Expansion Project and any settlement or judgment under the PCL Litigation. As a part of the limited waiver and amendment, for a period starting on June 9, 2020 until the first adjustment to occur after the fiscal quarter ending September 30, 2020, the interest rate is set as LIBOR plus 2.50%, or a base rate plus 1.50% and the commitment fees are set at 0.45%. Monarch is in continuing discussions with its lenders regarding additional relief options and amendments of the Amended Credit Facility. Currently, the Company has a term sheet and firm commitment letters from all banks participating in the current lending group for refinancing, which will be completed upon signing of the documents and will increase our credit facility and extend the lending period. If negotiations to complete the refinancing are not successful, this could have a material adverse impact to the Company’s financial condition. The Company believes that the cash in its interest-bearing money market fund and the $34.0 million available under its Amended Credit Facility as of June 30, 2020 will be sufficient to support its current operations, meet its debt obligations and fulfill its capital expenditure plans for the twelve months from filing of Form 10-Q for the quarter ended June 30, 2020; however, the Company is surrounded by uncertainty about COVID-19 and the reopening of its operations, as well as financial, economic, competitive, regulatory, and other factors, many of which are beyond its control. If the Company is unable to generate sufficient cash flow in the upcoming months or if its cash needs exceed the Company’s borrowing capacity under the Amended Credit Facility, it could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity.

LONG-TERM DEBT

6 Months Ended

Jun. 30, 2020

NOTE 6. LONG-TERM DEBT

On July 20, 2016, the Company entered into an amended and restated credit facility agreement (the “Amended Credit Facility”). Under the Amended Credit Facility, the Company’s available borrowing capacity was $250.0 million, and the maturity date was July 20, 2021.

At December 31, 2019, the total revolving loan commitment under the Amended Credit Facility was automatically and permanently reduced to $50.0 million and all $200.0 million (Conversion Amount) outstanding under the revolving loan was converted to a Term Loan. Prior to the conversion, the Company drew all available borrowings up to $200.0 million. Following the conversion to a Term Loan, on December 31, 2019, the Company made a $3.8 million mandatory principal payment.

As of June 30, 2020, the Company had an outstanding principal balance of $191.3 million under the Amended Credit Facility term loan. As of June 30, 2020, the Company had $16.0 million outstanding and $34 million remaining in available borrowings under the Amended Credit Facility revolving loan. The Company has a $0.6 million Standby Letter of Credit, from which there have been no withdrawals.

Borrowings are secured by liens on substantially all of the Company’s real and personal property.

In addition to other customary covenants for a facility of this nature, as of June 30, 2020, the Company is required to maintain a Total Leverage Ratio (at any time, the ratio of (a) Total Funded Debt at such time, to (b) EBITDA for the four consecutive fiscal quarter period most recently ended for which Financial Statements are available, as defined in the Amended Credit Facility) of no more than 3.5:1 and a Fixed Charge Coverage Ratio (for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date (a) the sum of (i) EBITDA minus (ii) income taxes paid in cash during such period minus (iii) Distributions made during such period (other than Distributions made pursuant to Section 5.02(f)(i)) minus (iv) Investments in Excluded Subsidiaries made during such period minus (v) Maintenance Capital Expenditures made during such period divided by (b) Fixed Charges for such period, as defined in the Amended Credit Facility) of at least 1.15:1. As of June 30, 2020, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 5.2:1 and 1.7:1, respectively.

The interest rate under the Amended Credit Facility is LIBOR plus a margin ranging from 1.00% to 2.50%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00% to 1.50%, or the Prime Rate. The applicable margins vary depending on Company’s leverage ratio.

The Company may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid may be re-borrowed so long as the total borrowings outstanding do not exceed the maximum principal available.

On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of the total revolving loan commitment, provided that each such increase is equal to $15.0 million or an integral multiple of $1.0 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $75.0 million.

The Company is required to make principal payments on the amount of the Term Loans on each Term Loan Installment Date (last business day of each quarter, starting with the quarter ending December 31, 2019) in an amount equal to (x) the percentage set forth opposite the applicable year during which such Term Loan Installment Date occurs multiplied by (y) the Conversion Amount. The estimated amount of the mandatory principal payment due in the next twelve months is $25.0 million.

In relation to the COVID-19 pandemic closure of the Company’s properties, the Company and the lender executed, on June 9, 2020, A Limited Waiver and Amendment to Credit Agreement.

The lender agreed to waive any default or event of default under the Amended Credit Facility resulting from (i) the failure to have the Atlantis Casino Resort or the Monarch Casino Black Hawk open and operating during the period commencing on April 1, 2020 and ending on September 30, 2020; (ii) the construction of the Monarch Black Hawk Expansion being stopped at any time prior to September 30, 2020; and (iii) the occurrence of a material adverse change on or prior to September 30, 2020, as a result of a mandated business cessation order. The lender also agreed to waive any default on the financial covenants under the Amended Credit Facility for a period commencing on April 1, 2020 and ending on September 29, 2020.

The Amended Credit Facility was amended by adding a new definition, “Operational Liquidity”, to the Amended Credit facility. Operational Liquidity as defined is, as of any date of determination, the amount by which (a) (i) the Unused Revolving Commitment as of such date, plus (ii) cash (including cage cash) as of such date exceeds (b) (i) $24,000,000 minus (ii) any retainage costs with respect to the expansion project and any settlement or judgment under the PCL Litigation paid in cash; provided that from and after the Monarch Black Hawk expansion project completion date, the receipt of a final certificate of occupancy (or its local equivalent) for the expansion project and the final resolution or disposition of the PCL Litigation, the amount in clause (b) shall be deemed to be zero. The Borrowers shall not permit Operational Liquidity to be less than $25,000,000 at any time. In addition, any borrowing under the Amended Credit Facility, greater than $26,000,000 shall be used solely to pay retainage costs with respect to the Expansion Project and any settlement or judgment under the PCL Litigation.

As a part of the limited waiver and amendment, for a period starting on June 9, 2020 until the first adjustment to occur after the fiscal quarter ending September 30, 2020, the interest rate is set as LIBOR plus 2.50%, or a base rate plus 1.50% and the commitment fees are set at 0.45%.

Monarch is in continuing discussions with its lenders regarding additional relief options and amendments of the Amended Credit Facility. Currently, the Company has a term sheet and firm commitment letters from all banks participating in the current lending group for refinancing, which will be completed upon signing of the documents and will increase our credit facility and extend the lending period.

If negotiations to complete the refinancing are not successful, this could have a material adverse impact to the Company’s financial condition.

The Company believes that the cash in its interest-bearing money market fund and the $34.0 million available under its Amended Credit Facility as of June 30, 2020 will be sufficient to support its current operations, meet its debt obligations and fulfill its capital expenditure plans for the twelve months from filing of Form 10-Q for the quarter ended June 30, 2020; however, the Company is surrounded by uncertainty about COVID-19 and the reopening of its operations, as well as financial, economic, competitive, regulatory, and other factors, many of which are beyond its control. If the Company is unable to generate sufficient cash flow in the upcoming months or if its cash needs exceed the Company’s borrowing capacity under the Amended Credit Facility, it could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity.