GLC Advisors & Co. GLC Advisors & Co. Mashantucket Pequot Tribal Nation Bondholder Presentation September 2012
Disclaimer – Important Legal Information This presentation has been prepared by GLC Advisors & Co., LLC (“GLC”), which has been serving as financial advisor to certain holders of the existing uninsured SRO, SSRO and Notes tranches in connection with restructuring negotiations with the Mashantucket Pequot Tribal Nation (“MPTN” or the “Tribe”). GLC is not an advisor to the Tribe. The Tribe and its advisors have prepared a separate presentation regarding the Tribe’s restructuring proposal and the Tribe is solely responsible for the contents of such presentation and for determining what disclosure is being provided to noteholders in connection with the noteholders’ decisions on whether to participate in the proposed restructuring. This presentation has been prepared by GLC solely for the purpose of assisting certain noteholders that are being contacted by the Tribe in evaluating the Tribe’s proposal. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe, and does not constitute an offer of, a solicitation of an offer with respect to, or a recommendation of participation by any noteholder in the restructuring proposal developed and being offered by the Tribe. Noteholders must rely solely on materials prepared and presented by the Tribe in making any investment decision or participation decision regarding the Tribe’s restructuring proposal. The models, estimates and projected performance of the Enterprise included herein are derived from information supplied by the Mashantucket Pequot Tribal Nation. Projections of New Business ECF, Contingent Interest and Run-Off Scenarios have been supplied by GLC for illustrative purposes only and are not projections or estimates of future performance. Without limiting the above, GLC has not independently verified the information contained herein, nor does GLC make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information contained in this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. GLC expressly disclaims any and all liability relating or resulting from the use of this presentation. The Tribe did not design GLC's work product, it is not responsible for GLC analyses or calculations. The Tribe has not been provided with or checked GLC's calculations. This presentation contains materials that are subject to a confidentiality agreement between the recipient and the Tribe, as well as materials that are subject to a confidentiality agreement between GLC and the Tribe. No further distribution of this presentation to anyone other than the direct recipients of this presentation is authorized by GLC, and the recipient is bound (to the extent and for the period set forth therein) by the terms of its confidentiality agreement with the Tribe with respect to the confidential contents of this presentation. Does not represent comprehensive terms. Terms more fully described in appropriate term sheet. Term sheets reference accrued balances as of 6/30/2012. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe. GLC Advisors & Co. 1
GLC Foxwoods Team Thomas Benninger Soren Reynertson Chairman Managing General Partner (415) 962-8515 (212) 542-4550 tmb@glcllc.com soren.reynertson@glca.com Michael Sellinger Jordan Stevens Principal Senior Associate (212) 542-4545 (212) 542-4544 michael.sellinger@glca.com jordan.stevens@glca.com Aron Hooks Analyst (212) 542-4558 aron.hooks@glca.com Does not represent comprehensive terms. Terms more fully described in appropriate term sheet. Term sheets reference accrued balances as of 6/30/2012. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe. GLC Advisors & Co. 2
Table of contents 1. Transaction Highlights 4 2. Overview of Key Terms 9 3. Implications of Failed Transaction 25 Appendix A: Model Outputs 28 Appendix B: Run-Off Scenario Outputs 33 Does not represent comprehensive terms. Terms more fully described in appropriate term sheet. Term sheets reference accrued balances as of 6/30/2012. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe. GLC Advisors & Co. 3
Section 1 Transaction Highlights GLC Advisors & Co.
Transaction Highlights Proposed transaction was the result of nearly three years of negotiations • Consensual deal is the preferred outcome relative to other potential approaches – Based on absolute priority, a “run-off” scenario implies no cash flow to bondholders for a meaningful period of time – Significant management, operational and other uncertainties – After due diligence, initial bondholder RSA signatories (1) determined that a litigation strategy was also unlikely to result in a superior recovery relative to the proposed transaction – Potential Tribal bankruptcy would likely focus on cram-downs; no ability to provide bondholders with equity recoveries given prohibitions under IGRA • Improves capital structure by reducing leverage and, most importantly, cash interest costs – Macroeconomic conditions and recent gaming expansion in the Northeast have put significant pressure on the Connecticut market and made the Tribe’s current capital structure unsustainable – MGM at Foxwoods expansion occurred at the peak of the market • Higher post-restructuring claims with lower interest rates preferred to more significant haircuts and higher interest rates – Long-term debt capacity and corresponding fixed charges were a point of significant debate – Necessitates longer maturity profile • Provides flexibility in anticipation of incremental competition from Massachusetts – Cash/PIK combinations and toggles may help the Tribe to avoid a future default unless there is a prolonged downturn in the Enterprise’s operations – Gives the Enterprise time to react to competitive developments Note: (1) Initial bondholder RSA signatories have not acted as representatives of the interest of any holders other than themselves. Does not represent comprehensive terms. Terms more fully described in appropriate term sheet. Term sheets reference accrued balances as of 6/30/2012. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe. GLC Advisors & Co. 5
Transaction Highlights (continued) Proposed transaction was the result of nearly three years of negotiations • Cash flows to all bondholders post-restructuring – Current interest bearing coupons, with PIK components during certain periods or upon certain conditions – Excess Cash Flow (“ECF”) – Contingent Interest (“CI”) and New Business ECF for SSROs and Notes • Contingent Interest provides additional potential recoveries to impaired bondholders based on the performance of the Enterprise – Cash-flow dependent opportunity to recover haircut on restructured fixed claim • New Business ECF could provide additional potential cash flow stream to SSROs and Notes based on performance of certain new Tribal investments • Dramatic reduction in and restructuring of distributions to the Tribe – Tribal distributions significantly reduced from pre-default levels – Fixed/variable dynamic further aligns Tribal and creditor incentives • Improved collateral package – Includes new mortgage lien on Two Trees and Lake of Isles until Bank Debt and SROs paid in full and certain other Enterprise assets previously only pledged to Banks – Payment rights and collateral subject to an intercreditor agreement (none previously in existence) • Enhanced disclosure and governance of related party transactions between the Tribe and the Enterprise • Enhanced financial reporting requirements Does not represent comprehensive terms. Terms more fully described in appropriate term sheet. Term sheets reference accrued balances as of 6/30/2012. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe. GLC Advisors & Co. 6
Transaction Highlights (continued) Proposed transaction better positions Foxwoods to compete Total Leverage Comparison (1) Interest Coverage Comparison (1) (2) 12.0x 2.5x 2.0x 9.0x 10.2x 7.8x 1.5x 7.3x 6.9x 6.0x 2.30x 1.0x 1.86x 5.6x 1.75x 5.4x 6.1x 1.35x 3.0x 0.5x 2.6x 2.7x 0.0x 0.0x Foxwoods Current (3) Mohegan Foxwoods PF (4) Foxwoods Mohegan Foxwoods PF Adj. Foxwoods Current PF (5) Bank SRO SSRO Total Notes: (1) Based on 2012P EBITDA of $219mm and LTM 6/30/12 EBITDA of $269mm for Foxwoods and Mohegan, respectively. Mohegan EBITDA is reduced from $323mm due to $54mm in relinquishment payments. (2) Calculated as EBITDA / cash interest expense unless otherwise noted. (3) Leverage statistics include accrued interest. (4) Includes closing fees and expenses. (5) Adjusted to include fixed Bank amortization. Does not represent comprehensive terms. Terms more fully described in appropriate term sheet. Term sheets reference accrued balances as of 6/30/2012. This presentation is not part of the Tribe’s presentation or of any offering materials prepared by the Tribe. GLC Advisors & Co. 7
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