River Rock’s Exchange Offer has Arrived

November 3, 2011

I said in my comments for my previous article about the River Rock Entertainment Authority bonds that I would have an update when there was something to update people about. I think the default and exchange offer qualifies

River Rock has filed with the SEC a forbearance agreement that has the votes of over 60% of existing bondholders, as well as the basic shape of an exchange offer. In my previous article I expressed some concern that an exchange offer was becoming the new plan, and not just the backup plan. My concerns were eased when the company was showing progress in a refinancing deal, but now that time has run out on that deal I’m glad to see a plan all the same.

As has been pointed out, the terms of the proposed exchange are as follows: Each holder will receive $1000 in principal in new senior notes for every $1000 worth of old notes, plus accrued interest, plus his or her prorated share of the amount of cash on River Rock’s balance sheet that exceeds $13.7 million. However, this cash distribution will count against the principal value of the notes. The new terms require the company to use 90% of its excess cash flow if EBITDA is above $50 million, and 100% if below that figure, to repurchase the bonds. However, I believe this will be on the individual bond level and not prorated. EBITDA in the trailing four quarters was $55 million, and looking back at the last three fiscal years this figure has remained stable at around $54 million.

The distribution of excess cash interests me; had things worked out differently I would have suggested throwing it at River Rock’s investment banks as a sweetener of any underwriting deal. However, the use of the cash to sweeten an exchange offer does not surprise me. I have been considering the assets available for creditors to seize in the event of a lawsuit, and that cash is pretty much it. Despite the waiver of sovereign immunity, only an Indian tribe can run and Indian casino, and the land under the casino is also held in trust. Thus, the only assets that would be realistically available to creditors would be from garnishing the casino’s bank accounts, and by draining its coffers in this manner the casino is offering a disincentive to holdouts. As detailed in Moyer’s Distressed Debt Analysis, a useful guide to distress and bankruptcy investing, finding some means of punishing holdouts in order to incentivize them to transfer is a common practice among debt workouts.

In terms of the early redemption of these bonds, I have mentioned the possibility of amortization in conversations with some readers. Certainly such an action would bring confidence to the lending community, particularly with the possibility of the Graton casino opening within the next few years. And of course with the expansion put on indefinite hold the casino doesn’t really have much else to do with its money. I would be very interested in the redemption mechanics; whether the company chooses the bonds randomly or simply repurchases from the large institutional holders, leaving us retail holders at the end of the line (I assume most of my readers are retail holders (or perhaps contemplating becoming a retail holder)).

On the whole, then, I think the proposed refinancing deal will work out well for us bondholders. I am actually surprised that a refinancing deal along these lines, perhaps with a separate amortizing and a standard bullet issue, could not have been accomplished. As I’ve always said, and as has been pointed out in the comments, there is ample cash flow to support the existing debt structure with money to spare. As such, I think that the the failure of River Rock and its banks to get a refinancing accomplished is not merely an unfortunate surprise; it is inexplicable, even considering the short time frame.

I think part of the problem could be a constituency issue based in the decision to issue part of the debt as municipal bonds. The core constituency of the existing bonds is high yield investors; even setting aside the sovereignty issue the casino has a fixed charge coverage ratio of only about 2.5. The high yield community, I’ve noticed, seems to give financial analysis much more scope, and thinks of due diligence as something other than simply a process to avoid getting sued. That is why, as I’ve said before, we don’t need a rating from the ratings agencies to tell us what is going on. The municipal bond community, on the other hand, would be more likely to adopt a defensive, ratings-based approach and less willing to take a flier on an unusual issue. But on the other hand, Credit Suisse had apparently been trying to place an ordinary high yield issue for some time before the idea of the Build American bonds was adopted, and of course there no doubt is a large (and growing) group of specialists in distressed municipal debt.

At any rate, I remain optimistic about this refinancing in terms of recovering my principle at some point. However, I am not happy about the the lower interest rate, which contradicts the plan proposed in my last article. Furthermore, the early redemption might work against us if the situation at River Rock improves or the interest rate in the high yield markets decline, thus depriving us of earning what could be an above-market rate. As I stated before, I believe that accepting the exchange offer will be preferrable to rejecting it. As valuehound, the well-known commenter on my previous post pointed out, it is the cash flows and economics of the situation that will drive this deal and should be our main concern, and those are adequate to support this issue.

Disclosure: At the time of this writing, the author owned River Rock Entertainment Authority bonds.

141 Responses to “River Rock’s Exchange Offer has Arrived”

  1. i have no experience with distressed debt investing, but it really strikes me that prisoner’s dilemma shows up here.

  2. the other thing that strikes me was how BAC or other banks weren’t willing to refinance the entire issue. I honestly would like to know why their risk management models reject this– why they think it wouldn’t be possible to hedge the risk, with plenty of coupon to spare.

    again i have no personal stake in these bonds, but I think holding out should be at least considered by those involved. i very much expect that this last comment will be censored by grocca :)

  3. Here goes grocca again with his articulate rubbish. These are the words of Charlatan Grocca

    “On the whole, then, I think the proposed refinancing deal will work out well for us bondholders.”

    So, Mr. Charlatan Grocca thinks that we got a good deal. I can explain the facts to the readers very quickly. RREA has been shopping its bonds with a yield of 13 to 14 percent. There weren’t any takers for the bonds. RREA is negotiating an Exchange Offer for 9 percent which is less than the yield of the current bond. Is this working out well Mr. Charlatan Grocca?

    The facts are mundane here.

    You can walk a mule to water but you can’t coerce him to eat BullSh?t.

    Sorry about rebuking you Mr. Charlatan Grocca but I don’t like Bull.

  4. Getting all your principal back on similar terms that you lent it out to a company in default is a good deal, apart from the interest rate haircut. And, of course, I bought the bonds at a discount so I’m technically getting more than 9%. A current purchaser would get even more.

    Hmm…actually, the last sell went off at 61.76 so if 65 is the purchase price, allowing for spreads and commissions, you would be getting a current yield of 13.85%, which falls neatly within the range you were complaining about. Plus you would receive the accrued interest.

    As it seems you are unaware of the effective yield of the refinancing given the market price, it’s probably just as well that you don’t contribute information or analysis. Feel free to complain, though; it’s highly amusing.

  5. What are implications of not exchanging the existing bonds for the new bonds?

  6. Rocca or others here…
    Can anyone please do a calculation, based on RREA’s recent past earnings, to indicate approx. how many of the new bonds would be retired early (each year)?

    These early retirements are like a “Sinking Fund”, which is common with munis. On those, there is a lottery done to determine whose bonds are bought back each time.

    Also, what is meant by the below distribution of balance sheet cash “counting against the principal value…” ??
    “…plus his or her prorated share of the amount of cash on River Rock’s balance sheet that exceeds $13.7 million. However, this cash distribution will count against the principal value of the notes.”

  7. Fidelity people have no idea how that mandatory redemption will work under the 90-100% sweep covenants assuming this exchange is successful. They do recall though the horrible mess with CIT restructuring which had a similar feature. Apparently took them several years to settle on some final redemption system.

    Their feeble (i.e. Fidelity) recollection is that it was proportional, that is everybody got his/hers proportional share and people ended up with fractional notes in their accounts.

    Apparently there is no way to get it clarified before the solicitation starts, their PR guy, Duffy or something is unavailable, besides he’s just PR so he knows nothing technical, and all other law offices I contacted that were involved in this deal have not responded yet. Same with the Casino.

  8. I would say roughly $25-$30 million per year.

    “…plus his or her prorated share of the amount of cash on River Rock’s balance sheet that exceeds $13.7 million. However, this cash distribution will count against the principal value of the notes.”

    Means that the cash distribution will reduce the face value of the bonds. If there is a $20 million cash distribution, for example, there will be only $180 million in principle left, which will leave each bond with a par value of $90.

  9. Thx for your replies.

  10. In other words, exchanging holders will get for each $1000 bond tendered:
    – $900 in new bonds,
    – $100 in cash,
    – roughly $50-60+ in the accrued interest.

    Non-exchanging holders will get nothing, no interest, no cash, no new bonds. Will get to keep their old bonds that they will be able to trade on the open market as long as such market exists. Also they may sue to recover their $1000 + original due interest, but their chances of prevailing are essentially nonexistent.

  11. actually, I’m not even sure they could sue, only the Trustee has that right under the original Indenture to sue, and with a successful even minimally subscribed exchange, there is no way they will sue.

  12. Also there is some chance that RREA will take mercy upon non-exchangers some time in the future and will offer them $900 for each $1000 tendered, but nothing else.

  13. Also note that the offer will expire quickly, meaning dormant and unattended accounts will lose o lot.

  14. Not that my opinion counts. If we are consuming 90% of their free cash flow I think the tribe will want to get out from under us by any means possible. When the debt is down to a more manageable level say half I could see them trying the market again and doing another refi with less restrictive convenants

    Thoughts anyone?

  15. Will there be a tradable market for these bonds as there was in the previous issue or is there any talk of them being restricted in some way only being able to dispose of them via the tribe periodically buying them back? If you can trade them what’s the odds of the price plummeting the moment they hit the street? And aren’t we right back to a weakly trading issue right out of the gate if we want to dispose of them entirely? In my opinion there are far more attractive high yield bonds out there than this one.

  16. There is a new filing today arranging for the tribe to charge the casino money to rent the new land and road they were compelled to build. A great way to reduce the “excess money” that could be available to pay exchanged bondholders in that part of the new agreement.

  17. Concur here, very likely, but I want to see the current deal done first. BTW, 9% to me is fair, has anybody seen what Foxwoods is planning to pay?

    BTW 2. Does anyone here understand the latest deal of theirs; reported today to the SEC? Appears the tribe bought some parcel of land for 3M, which the Casino refunded to them in full, so it cost them (the Tribe that is) nothing I assume. Now the Casino reports a deal with the Tribe whereby they rent it back from them for a cool $232K a month. How is is possible that the Casino pays for a piece of land, then agrees to pay a monthly rent for it? An arrangement to reduce their cash flow? What am I missing here?

  18. Wow.
    Wow. Do you guys really leave your financial interests at the hands of what some dope in a Fidelity call center in Utah? Do you have little respect for the value of your own cash? Do you read Ks? Do you read Qs? Do you do math? Do you actually concentrate on the details or do you just sit down and write whatever inane thought comes to you the top of your pointy little heads?

    Craig. Do you know what IRR is? The “yield” on this exchange package is not 9%. Your return will be governed by when you bought the bond; at what price; and what cash flows you receive in return for that purchase. Unless you bought these bonds on 2003 as a new issue, I doubt you paid par. You have earned 9.75% coupon; you are going to be paid 9.75% accrued THROUGH to the consummation of the deal. At the deal date, you are immediately going to get cash back, I would guess something close to 11.5c; and then you will get a new note that pays a COUPON of 9%. That note will sink, and it will sink pretty quickly. My back of the envelope calculations suggest you will have something approximating a 4 year average life on your note. Your IRR is going to be much greater than 9%, and as that note pays down and the Casino continues to delever, you are going to see the bonds move towards par, if they don’t trade pretty close to par to start. Unless you completely screwed this up, you are going to have an IRR that is solidly double digits, and ver likely north of 20%. Coupon is one small part of the math, and the degree to which a lower coupon allows less debt service and a faster cash flow sweep to investors, IRR GOES UP YOU IDIOT!

    WG. Please stop calling people. Nobody cares. Really. Nobody cares. The people at Fidelity don’t care; the Trustee doesn’t care; Council to the various parties don’t care. Please, for your own sanity and in respect to other people’s time, stop harassing people. If you could do the math, which at this point I question, you and Craig and some of these other brain trusts would realize that you are going to earn a very, very, very, healthy return for holding these bonds and exchanging them. And if you don’t exchange, I have news for you….you will BE EXCHANGED. READ THE INDENTURE. 66.75% of note holders is the hurdle which any restructuring needs to reach. The same hurdle they need to reach a forbearance agreement….and they already reached a forbearance agreement…you following WG? They are going to pass the motion on behalf of the class, and you are going to come along, like it or not. That is how “collective action” works.

    And just for the record, CIT was not a mess. The took a giant, unwieldy capital structure, consolidated it, kept the Company running during the course of the restructuring, and are now paying down and retiring most of the debt that it took to do so. The CIT 7% of 17 trade NORTH of par. How are the CIT 7% of 13 trading? They aren’t, because they have been retired. Seriously WG, get a grip. Do some work. Run some numbers.

    Good lord guys. Read the indenture. Do the math. And as for the lease deal…really? You don’t “get it” ? Do you read their K’s? Do you follow their earnings releases? They are leasing the land to build the access road the Sonoma County requires of them. The Tribe purchased the land, because the Tribe owns ALL the land. It leases an easement to the Casino, which is really just a pass-through allowing the Tribe to then pay for the purchase over an agreed upon period. When that payment is complete, the rent drops. Its just a different form of mortgage but has to pass through the Tribe because they are the title holders to all the land associated with the casino. This is not new news.


  19. Is this guy a bad joke or what? Redefinition of worst, appears pathological almost, case if intellectual dishonesty. Presence of such in the community making live so unpleasant. Sad.

    For the umpteenth time exchanging is the best options for everybody at this point, I think you should do it, which will be simple, when the solicitation starts your broker will tell you how .

    BTW they reduced their estimate for 3Q net income before distributions to tribe by roughly 10%, delta 0.8M. But ETBITA remains unchanged which is good.

  20. Repeat, it would be nice to know from the financial planning point of view how that 90-100% sweep redemption will be done. Waiting for the first coupon day to discover, approx. 7 months from now (i.e if the exchange is, hopefully (that’s for that intellectual sleazebag above), successful) is not optimal.

    So I repeat Mr. Grocca’s appeal, if you know how that is done, share it please.

  21. Or rather WILL be done, we know the options are , proportional, lottery, institutional holders and open market buy backs.

  22. Rough guess on IRR….

    These numbers will be different for everyone, but just to give show what approximate IRRS might be on these River bonds…

    My cost is about 81c on average; if I simply take the exchange as positioned now, I would guess that by December 15th you are going to have your 9.75 cpn for the 6 months of coupon period + the 1.5 months of forbearance period; you will also get paid down some P on the old notes, I am guessing about 11.5c; If the new notes in March of 2012 are trading at 80, which seems a very reasonable and conservative assumption to me; the IRR on this trade is 18.89%….if they trade to 70 you will still be in the money at 3.9%; and if they trade to 90 you will be clicking along at 33.78%. On a multiple of invested equity, my numbers (using 80 in March) would indicate the trade is at about 1.24X, and that is over a pretty short (less than 1 year) term.

    Not sure what anybody else is finding out there, but those seem like pretty compelling numbers to me.

  23. valuehound or valueless. This is a statement from valuehound:

    “It certainly sounds like these bonds are going lower. Recovery to holders in the scenerio you speak of can’t be any higher than 20 or maybe 30c, and that will probably be only AFTER the banks get their money out of the tribe. Might just be time to admit that this is not working out. 70c seems a pretty generous price at this point.”

    Valuehound, a good investor is consistent. You don’t recollect your nonsense but i do. You are pessimistic today and optimistic tomorrow. Sounds like a pitiful and lousy investor.

    Valuehound stated the proposed muni tranche was an optimistic sign by RREA. Valuehound is valueless again. Did you really believe that a complex transaction of that magnitude would get done in time. Novice!!!!!! Secondly, city and state governments are having an arduous time with muni bonds. Did you really expect a little incompetent Indian Tribe to successful auction these mini bonds. Dolt!!!!! Let me repeat, valuehound is valueless and clueless.

    Wg is sometimes all over the map but I trust his opinion more than yours because you are a fraud. What are your holdings in RREA? Valuehound(Valueless) and Charlatan Grocca haven’t divulge their holdings in RREA. Are both of you guys frauds?

    I can enumerate more of your ludicrous opinions but it is a waste of time. By the way, valueless and charlatan please peruse my blog because i’m consistent from day one to now.

    Charlatan Grocca ranted about his 13 to 14 percent yield. My returns are calculated to the maturity date. If I wanted to invest in a remiss Indian tribe for a zillion years, I would sit my money in the bank. Do you really believe your so-call 13 percent for 7 years RREA is worth the risk with a new casino in the pipeline. Later, you two Simpletons!!!!!!

  24. I certainly have disclosed that I hold these bonds, and the fact remains that the current yield on the bonds at the current price is 13.85%, plus the accrued interest paid when the exchange is consummated. Also, as the bonds will be paid off at par, the 35 points of discount is part of your return. So, when you say you calculate your returns to the maturity date, you’re clearly doing it wrong if you think you’re only getting 9% off of them.

    If you like your own blog better, I advise you to return to it, because clearly you are not suited to this one. But it is a bold statement referring us to a blog you’ve never posted a link to.

  25. Allow me to suggest that we should not ‘feed the trolls’, Geoffrey. Maybe having trolls means that your blog has ‘made it’.

    Anyone who has to resort to name calling as though he is on a school playground is not worth the time a response would require. (It’s funny- they think themselves clever for coming up with these put downs when it just proves how foolish they are.) What is that saying about a fool and his money? If somebody’s not happy with this bond or doesn’t understand what’s going on by now, log on to your brokerage account, select this bond, click the big ‘Trade’ button, and choose ‘Sell to close’ with order type of ‘Market’.

    Geoffrey, please continue the commentary! Thanks to you and valuehound for trying to make sense of this deal.

  26. It’s obvious that Geoffrey has a sense of humor, since he allows us to see the ridiculous comments made here.

    Commenting here isn’t a right; it’s at the discretion of the blog owner.

  27. Here is (next post) the answer I’ve received from one of the law firms involved in the current exchange. There are no republication restrictions attached to it, so I think it is OK to republish it here.

    Also, personally and on the behalf of all “retail” owners of the current issue, I want to thank that law firm for their prompt response.

  28. I serve as independent financial advisor to the River Rock Entertainment Authority and have been asked to respond to your question as to the methodology by which the Exchange Notes may be redeemed from Excess Cash Flow. These mechanics and all other matters related to the Exchange Notes will be contained in the Exchange Offer document that will be made available to all holders of record of the RREA Series 2003 Notes and all decisions regarding the tender and exchange should be made in reliance solely upon said document which is anticipated to be distributed on or about November 17th, 2011.

    That being said, it is anticipated that If less than all of the Notes of a series are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select the Notes from such series to be redeemed or purchased among those Holders of the Notes to be redeemed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. No Notes of $2,000 or less may be redeemed in part. This type of provision has been reviewed by counsel to the investors, Akin Gump, and I would anticipate that it will be contained in the Indenture of the Exchange Notes. But, as I have offered above, final terms will be contained in the Exchange Offer documents which shall be made available to holders for their review and consideration.

  29. So basically it will be up to the Trustee how they will do it.

  30. but pro rata seems most likely I sense.

  31. Thanks WG!

  32. The prospects for bonds not exchanged are tricky. It is likely that if the trustee refuses to enforce the requirement that the principal and interest be paid (the only things that cannot be waived by less than 100% consent)the remaining bondholders could seek to have the trustee replaced. Whether the waiver of sovereign immunity would apply to the new trustee is the question.

  33. Does anyone know if bond holders will actually have to vote to receive the new bonds and cash or is the vote “For” the default and bond holders would only have to vote explicitly “Against” if they choose to abstain. Just want to make sure I don’t screw myself by not placing the vote on time.

  34. 11/10/11 Boy do I have a case. My wonderful broker never told me about this default or delay nor sent me the information to vote on it. To top this off I just talked to this broker this week about whether the cash was received since the due date was 11/1/11. Any ideas on what I should do now?

  35. You are not too late Frank. RREA has not technically announced the exchange yet. It should be around the 17th or 18th per WGs note. You can lok at the basic terms of the exchange now, covered well here, and let your broker know you intend to support the exchange. You should check back on ten 17 th o 18th to confirm he has seen the motion, and then confirm AGAIN that you want to support the exchange. These guys get lazy unfortunately and Fidelity in particular often sends the forms out after their due date. You really need to start calling and being a pain about process as soon as the offer is officially out there. You dont want to miss this and be stuck with worthless paper.

  36. RREA posted a new 10-Q today. I urge you all to read the second part of it that discusses the exchange offer and the latest summary of current and upcoming competition: http://phoenix.corporate-ir.net/phoenix.zhtml?c=147965&p=IROL-sec
    It appears they may drag their feet after the elections to exchange by waiting ’til late in December to consummate the deal. This release doesn’t specify the timeframe during which we must elect to accept the exchange. It’s apparent that Merrill controls everyone’s destiny. If there was a mechanism through which I could sell my newly exchanged bonds IMMEDIATELY following receiving them I would. If anyone out there thinks highly of this new “opportunity” I’ll be glad to sell to you as close to 100 as I can manage.

  37. What’s with the extremely large distribution in the 3rd quarter?

  38. JS: The bond exchange timeframe is the same as expressed previously. Done by end of the year.

  39. The RR Bonds are trading today! People want to get in on the deal, before it’s too late.
    If I had more cash, would buy those 10 bonds available on BondDesk (ETrade, Zions, Vanguard) at only 68.0

    How about it, other people on here buying any today?

  40. I just got those 10 bonds on etrade. They were listed @68 but the trade went through @65. I hope they’re not whipped cream on dog sh*t.

  41. Another cliffhanger, will they make this exchange offer or not? Was supposed to be today but apparently is not happening.

    (What we have seen before was a mere non binding offer to make (maybe, possibly) an offer by 11/18. In other words it ain’t over till it’s over.)

  42. WG:
    Is Frank King the advisor that was “speaking” here in your 11/6 post?:

    ” I serve as independent financial advisor to the River Rock Entertainment Authority… “

  43. Actually, this whole thing is starting to look positively weird. It appears the tribe, their casino people and all their advisors lost their collective mind and went berserk. This or they are torn between a desire to stiff us and to come out clean. And cannot decide which.

    In any case, taken in their entirety, their actions in the last month or so make zero sense, actually seem schizophrenic.

    How otherwise could one explain this: announcing a new bond issue a few days before refinancing is due. Failing with it of course. Then defaulting on their debt only to enter the next day into an emergency forbearance agreement. Then a few days later proposing an exchange, setting a dateline on it, and then reneging on it just when they were supposed to offer it officially. What the eff is going here?

    Technically they are back in default, unless they get an agreement from the majority of the bondholders to extend, which they can, per the original filing with the SEC. But I don’t see anything that is or should be blocking the original exchange other than a desire to not to really do it.

    In any case, nobody knows anything, Fidelity is noncommittal, obviously, referred me to the Trustee, which turns out knows nothing about the forbearance agreement, not to mentioned the exchange offer. Man all this stinks to high heaven.

    Anybody here knows by some chance of an OWS site that’s relatively civil i.e w/o pepper spray or billy clubs?

    I think I need to talk to their office first before I could reveal here who FK is.

  44. wg: You might want to calm down, buddy. We should see the exchange offer this coming week.

    Frank King is with Stuyvesant Square Advisors; they are working with River Rock.

  45. ETrade/BondDesk 768369AB6 Bid/Ask Data,
    as of Fri 11/18 Close.

    Many more bonds wanted to be purchased, than being offered for sale. Expect the prices to rise again after the Exchange Offer comes.

    Bids Qty Min Qty Price
    403 3 66.350

    Offers Qty Min Qty Price
    10 5 69.9

  46. The actual Exchange Offer has been released this morning; there are 2 new SEC documents released by River Rock.

    Current bondholders have the option of exchanging for either the New Series A 9% notes, or the New Series B 7.5% tax-exempt notes

    Unless extended, the Exchange Offer expires @ midnight Dec 19th

  47. Finally!

  48. http://www.istockanalyst.com/business/news/5557116/river-rock-entertainment-authority-launches-exchange-offer-and-consent-solicitation-for-its-93-4-senior-notes-due-2011

    Promises made, promises kept. RIGHT. time will tell.

  49. Does the exchange offer include having the Authority pay the accrued interest on the old notes from 5/1/11? I didn’t see that mentioned in the SEC filing?

  50. Bob S: The below is from page 206 of the pdf file of the T3 filing. (All participants in the exchange get the accrued interst till Nov 1st & participants consenting by Dec 5th also get the interest through the acceptance date)
    Upon the terms and subject to the satisfaction or waiver of the conditions to the Offer and Consent Solicitation set forth in the Offer Documents, we
    hereby offer to pay each Holder of Existing Notes who validly delivers (and does not validly revoke) its Consent to the Proposed Amendments and Waiver on
    or prior to the Expiration Date the Consent Consideration, which shall be composed of:

    a cash Consent Payment equal to the accrued and unpaid interest on the principal amount of Existing Notes in respect of which such Consent has
    been validly delivered (and not validly revoked) up to, but not including, November 1, 2011; and
    if such Consent has been validly delivered (and not validly revoked) on or prior to the Consent Date,

    a cash Consent Premium equal to the
    interest on such Existing Notes computed at the rate of 93/4% per annum from, and including, November 1, 2011 to, but not including, the
    Acceptance Date.

  51. Steve, got it, Thanks.

  52. Bob, you are welcome.

    The “Acceptance Date” isn’t when each person accepts;
    It’s defined as: “Promptly after the Expiration Date”
    (The Expiration Date is Dec 19th)

  53. What is the exact procedure for accepting the tender offer? Should we expect forms in the mail from our brokers? Or do we need to give instructions to our brokers to accept the offer?

  54. I hold RIRK bonds through Etrade and needed to contact someone in corporate actions department to make my acceptance for the exchange.

    I received no other notice from Etrade on this…just getting information from this blog and from the River Rock web site.

  55. Are the series B 7.5% tax exempt notes exempt from Federal income tax or are they exempt only from California state income tax?

  56. I too would like to know the procedure for accepting the offer. The 11/21 press release states:

    Tenders of Existing Notes and delivery of related consents may only be made pursuant to the Offering
    Circular and related Letter of Transmittal and Consent. The Offering Circular and Letter of Transmittal set
    forth the complete terms of the Offer and Consent Solicitation.

    Does this mean a) I will be receiving the above document(s) in the mail or b) I have to navigate the phone maze at Fidelity to find a bond specialist or c) the docs are online somewhere and I have to find, download, sign and return by 12/19 or d) I do nothing and the new bonds automagically show up in my account or e)something entirely different?

    Mike C, you stated that you “needed to contact someone in corporate actions department to make my acceptance for the exchange”…

    How were you made aware that you needed to do this? Did you find out that nothing will be coming in the mail and that this is the way it must be done?

  57. I use ETrade as well and I asked the online customer service department, which told me about the corporate actions department. I think it would be advisable for all of you to take the initiative in contacting your brokers.

  58. If you are an E-trade customer, you should have received this today by e-mail and as an account alert.

    Corporate actions will charge you $30 BTW.

    SEC: 5431112
    CUSIP: 768369AB6

    LATE CUTOFF DATE-12/15/11



  59. Fidelity had no info but gave me the # of the information agent for RREA

    Kathleen Moffatt
    D. F. King and Company

    She sent me the Exchange Offer docs. Fidelity said Early Consent had to be to them by 7pm Friday, Dec. 2. but won’t take consent until late Wed. or Thurs. because they’re waiting for some clarification?? Geesh!!

  60. Yesterday I elected “Option 1″ with Fidelity’s bond desk by phone. Option 1 is Series A, 9% taxable, 2018 with Consent. The gentleman at Fido who handled it for me was Brandon Yates at 800-476-4589 ext 72567. He is now very familiar with the RR situation and just received all that was necessary to execute my request yesterday.

  61. Fidelity just took my early consent for exchange via phone as of this morning-11.29.11 very pleasant intraction

  62. oops! —inteRaction

  63. Fidelity IS taking your tenders, 12/02 at the latest. I submitted mine already. Just call them.

    BTW when you talk to them make sure that they register your consents to two additional conditions* of the RREA exchange offer, BOTH of them. Otherwise your tender will be technically invalid.

    A few technical notes:

    The official exchange offer documents can be found on the information and exchange offer agent site. Specifically here:
    http://www.dfking.com/RREA. Three noteworthy things:

    a) if you exchanging LESS than $50k you will be exchanged 1:1; those above $50k will get some part of it in cash (likely approx. 10%) as discussed previously.

    b) future amortization will be done on the PRO-RATA basis, that is the method of payment is no longer up the whim of the trustee.

    c) tax exempt tranche is for federal tax purposes only.

    * these significantly dilute your rights under the new indenture.

  64. E-trade is charging for handling this exchange! That’s radiculous.

  65. I was able to get confirmation of my early consent today at Fidelity. Who know what it all means. Subject to majority approval and subject to them accepting all of my bonds. Only a portion could be part of the agreement, or so say the people at Fidelity. Lot of if’s. In any event I have a confirmation number for the early bird special!

  66. jonathanpollardspy- I don’t know if they’re CA exempt, but they are federally exempt, so they have a high tax-exempt equivalent yield (subtract your top marginal tax rate from 100, then divide 7.5 by that number- for example, if you’re in the 28% bracket .100-.28=.72, 7.5/.72= 10.4% TEY). Redemption is easy- just call your broker. Oh, for those of you who think you can do this all yourself without one, good luck. Interesting that those who hold over 50k get about10% of their principal back, while those under 50k do not get principal. Easily justified, but interesting.

  67. @ Bob in NJ: I did receive this alert and the first question I had for them was where is option 3A/B? (There is no clear statement for option 3 which notes you want, the 9 or the 7.5) They told me that I just need tell them which ones I want and they will make it happen. Hope so.

    Also asked if total bonds across two different accounts could be combined to qualify for the 50k plus option, they said no, each account was a separate entity. Can anyone decipher the advantage of the 50k plus option. I read that thing 10 times and I believe it’s better but by how much I still can’t determine.

  68. Wg- BTW when you talk to them make sure that they register your consents to two additional conditions* of the RREA exchange offer, BOTH of them. Otherwise your tender will be technically invalid.

    wg- I do not understand this, can someone pls. explain. I did not ask Fidelity for anything additional-just a consent to exchange all bonds-DONE.


  69. I read the exchange offer summary carefully, skimmed the full circular, and on 11-29 gave instructions to Fidelity for the exchange and consent. They did not send me any emails. They took a lot of time to be sure they understood the offer and could properly explain and accept the instructions as I hold the existing bonds in various accounts. They said it was a busy day with many calls about these bonds.

    There is only one Consent decision to make, which covers various topics that affect the Existing Notes only. So anyone making the exchange would have no reason not to give Consent. If you give your Consent, you are eligible for the Consent Consideration (i.e. interest owed thru 11-1-11) and if you give the Consent before Dec 5 you are eligible for the Consent Premium (i.e. interest continuing thru the date of the exchange).

  70. There are three parts to this offer:

    a) EXCHANGING your old bonds for new ones,

    b) CONSENTING to the waiver of existing defaults and associated issues under the old bond,

    c) CONSENTING to the termination of the existing collateral agreement, etc (old bonds again).

    I have no idea what the consequences of not registering your consents (b) and (c) will be. The circular is written (as usual) in an extremely convoluted language likely to make the deciphering of their real intent next to impossible. Not consenting may affect your right to accrued interest and “in extremis” to voiding your exchange tender. Don’t really know.

    Your BEST BET is to make sure that you do all three things. Here is what I did.

    Told the Fidelity bond guy that I wanted to exchange my old bonds for the new ones and that I wanted to consent to b and c. He didn’t really know about b) and c). After talking to somebody higher up, he came back and read back to me (upon my insistence) that i) I wanted to exchange and that ii) I consented to b) and c). This was before they started to use the present terminology (option one, etc). I know that the exchange part (a) worked because they cancelled my old bonds and replaced them with a temporary issue(CUSIP 768CASAB9, the old one was 768369AB6). For (b) and (c) the only thing I have is their confirmation number and their audio recording of my conversation with them.


    At the risk of overloading their lines, (sorry Fidelity), I suggest that you:

    a) check the CUSIP number of your bonds in your accounts, they should be 768CASAB9 if you are exchanging for the taxable issue.

    b) call them and explicitly ask them whether they registered your consents to (b) and (c) and get a confirmation number if you don’t have one yet.

    Bit paranoid, but what do you have to lose?. Never know with lawyers.

  71. ETrade’s announcement of the offer includes the line “by participating you are consenting to the amendments describe[sic] on documents dated 11/18/2011″

  72. Does anyone have a view on which bonds (taxable or tax-exempt) will have greater liquidity?

    As an individual 28% or higher federal tax bracket, is there any reason not to take the tax-exempt bonds?

  73. I don’t understand why anyone would consent to this default-event “exchange offer”, given the kind of debtor you’re dealing with. Unless you’re a charity willing to fund the Pomo tribe consuming endeavors. I say stand your ground and do not consent. This is no ethical entity. They shall return our money by taking that new loan or go in full default if they can afford the outcome.

  74. Luke,

    And what would you have us do? Hire an expensive lawyer and take legal action, and doulbe or triple our potential loss.

  75. Luke, I agree with your points. You are absolutely right about this unethical entity; however, this unethical entity controls our money. For example, RREA decided to default on the bond interest. Why? Blackmail. RREA decided that if they can get any financing done, they want to party with your interest money. I’m surprise the other genius here didn’t mention it. Everyone is saying this is a good deal but here is another way of looking at it. Someone walks up to you to rob you for your belongings. The robber tells you if you give him your wallet, car and house keys, car, wife and children, that he will let you live. Some individuals will say that is a good deal but I think it is a terrible offering. In summation, we don’t have any choice at this time because apparently the majority is going to accept the deal anyway and just pull you along for the ride. Legally, you might be able to obtain the worthless assets from the tribe but it is valueless. Therefore, this unethical entity has a shotgun to your head and you must be a good boy or just will not get anything. Hopefully this helps but your opinion is valid.

  76. From the amended indenture

    a. Waiver of Sovereign Immunity. Each of the Depositor (for itself) and the Tribe (for itself and each other Tribal Party) unconditionally and irrevocably waives its or their sovereign immunity from any suit, action, proceeding or legal process of any nature, and any and all defenses based thereon, with respect to any claim, demand, dispute, action or cause of action related or incidental to this Agreement, the 9 ¾% Notes, the New Indenture Notes, the Collateral Documents or the Parity Lien Collateral Documents, whether now existing or hereafter arising and whether sounding in tort, contract, or otherwise (collectively “Permitted Claims”). Such unconditional and irrevocable waiver extends (i) to permit the interpretation, enforcement and the seeking of legal or equitable relief and remedies (whether through an award or granting of specific performance, injunction, mandamus, damages or otherwise) through judicial proceedings and other legal process as hereinafter provided, (ii) to permit judicial actions in any of the Applicable Courts (as defined below) to compel, enter judgment upon, enforce, modify or vacate any award or interim injunctive relief related to the arbitration proceedings described below, and (iii) to permit a judgment or order issued by an Applicable Court or arbitrator as provided hereunder to be enforced in any court of competent jurisdiction (including the Federal and State Courts in California); provided, however, such waiver shall be subject to the following limitations: (a) no Person may seek enforcement or recover any damages as a result of such waiver against any property or rights of the Depositor or the



    Tribe, except as against Gaming Assets (other than Excluded Assets) (as each such term is defined in the Indenture) and Gaming Assets distributed or otherwise transferred or conveyed (either directly or indirectly) to the Tribe in contravention of the Indenture, except in the case of a breach by the Tribe of its obligations under the Indenture in which it receives any payment or amount in violation of the Indenture, in which case a Person may seek enforcement against assets of the Tribe and the Depositor other than Gaming Assets, in each case other than Excluded Assets, but only to the extent of such payment or amount received by the Tribe, (b) no Person will be entitled to enforce such waiver except the Trustee, the New Indenture Trustee, the Collateral Trustee, holders of the 9 ¾% Notes, holders of the Parity Lien Debt, Persons entitled to be indemnified under this Agreement, and the respective successors and assigns of the Trustee, New Indenture Trustee, the Collateral Trustee and such holders and Persons (each, a “Permitted Party”); (c) no Person shall be entitled to assert a claim because of such waiver except a Permitted Claim; (d) claims permitted by such waiver may be brought only in the Applicable Courts or in arbitration proceedings as described below; and (e) all Permitted Claims shall be interpreted and subject to the internal law of the State of New York.

    b. Waiver of Tribal Court. Each of the Depositor and the Tribe unconditionally and irrevocably waives the jurisdiction and right of any tribal court or forum, now or hereafter existing or created, to hear or resolve any Permitted Claim. Each of the Depositor and the Tribe unconditionally and irrevocably waives the application of any rule or doctrine relating to the exhaustion of tribal remedies, abstention or comity that might otherwise require or permit a Permitted Claim to be heard or resolved (either initially or finally) in a tribal court or other tribal forum.

    c. Jurisdiction. Each of the Depositor and the Tribe irrevocably consents to arbitration as described below and for the resolution and enforcement of Permitted Claims and actions permitted by the waivers described above, to the following courts (the “Applicable Courts”): the United States District Court for the Northern District of California or the Superior Court of the State of California located in San Francisco, California.

    d. Arbitration. At the election of the Secured Party, any Permitted Claims must be resolved by binding arbitration in Los Angeles, California under the Streamlined Arbitration Rules of JAMS. An arbitration proceeding may be commenced only by the Secured Party, or to the extent remedies may be enforced directly by a holder of 9 ¾% Notes or New Indenture Notes, by the holder upon the filing with JAMS of a claim (within the meaning of the JAMS Streamlined Arbitration Rules and serving a copy thereof on the Depositor. A single arbitrator shall hear the Permitted Claim, and shall be selected in accordance with the rules of JAMS. No person shall be eligible to serve as an arbitrator if the person is related to, affiliated with or has represented in a legal capacity any party to the arbitration proceeding or any party to this Agreement. Any party shall be permitted to engage in any discovery permitted under the rules of JAMS. However, all discovery shall be completed within 90 days following the initial filing of the claim. The hearing on the arbitration must be held in the City of Los Angeles, California, and commence and be completed no more than 30 days after the close of discovery, and the arbitrator shall render an award in writing within 30 days of the completion of the hearing, which shall contain findings of facts and conclusions of law. Any arbitrator appointed hereunder may award interim injunctive relief before the final arbitration award. Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrator.

  77. The offer has been accepted, 92% of existing bondholders elected to exchange. BTW they extended the deadline, two more days to exchange, the deadline is now December 7. To correct the misconception a few posts above, the exchange offer include the payment of the accrued interest, that is the last semiannual coupon plus whatever accrues to the day of actual exchange.

    P.S. Those who have already exchanged to the taxable version may want to reconsider, they’ve increased the interest rate on the tax exempt (federal only) flavor to 8%, which is not bad depending on your tax situation. But read first the circular on tax consequences of exchanging into tax free version.

  78. Does anyone know of a similar message board/website for the MHTG.GL 608328AK6 Corporate MOHEGAN TRIBAL GAMING AUTH 8.00 04/01/2012 Ca CC NR 66.000 which are now in a similar situation as River Rock was in terms of a principal payment coming due.

  79. Has anyone received their consent payment of back interest. It seems to me we should have received it yesterday?

  80. I did not .

  81. I saw in my ETrade transaction history that I received $100.29 cash for each old bond I had and received the new bonds. The number of new bonds is 96% of the number of old bonds I had. I also had bonds in another smaller account that show a 1 for 1 exchange. The new bonds nor the cash show on my ETrade positions page yet, although that is somewhat normal for the way Etrade posts transactions. Will probably update tomorrow. Also a $30 reorg fee for each account.

  82. An update on my account activity. The 1 for 1 exchange in the small account now shows $62.29 per bond interest. So according to the recent news release everything appears to be correct except for the odd lot cash. According to the news release I was supposed to get 96.2% of the old bonds but I only got 96% of the old bonds. The sub 50k+ account received a 1 for 1 bond exchange and a $62.29 per bond interest payment. The two +50k accounts received $38+62.29 in cash and .96 new bonds to old bonds. I had odd lot values of 0.504 bonds and 0.326 bonds for each of these accounts but I don’t see the payment associated with that. Hopefully it will post in a day or so, otherwise I will have to call them. Anyone, am I missing something on the odd lots?

  83. Any one know the new CUSIP numbers for the bonds and are the pay dates still 11/1 and 5/1?

  84. Zilch here too so far, but Fidelity expects to pay today.

    P.S. Don’t see why they should move the coupon dates. CUSIPS are in the circular, besides you will see them in your account once the exchange is done.

  85. What a mess at Fidelity! Second time in this case!

  86. I chose the municipal bondi and the exchange showed up in the account today along with a cash payment.

    Here’s what Fidelity bond details screen shows for the muni issue:

    CUSIP 768372AA2
    Pay Frequency SEMI-ANNUALLY
    Coupon 8.000
    Maturity Date 11/01/2018

    Issuer Information

    Issue Date 12/21/2011
    Dated Date 12/21/2011
    First Coupon Date 05/01/2012
    Next Coupon —
    Last Coupon —
    Workout Date 11/01/2018

    Security Features

    Use of Proceeds UNKNOWN
    State CA
    Insurer —
    Federally Taxable NO
    Subject to Alternative Minimum Tax NO
    Minimum Investment Qty 5
    Incremental Investment Qty 5
    Marginable NO
    Original Issue Discount [OID] —
    Pre-Refund NO
    Escrow to Maturity NO
    First Settlement Date 12/21/2011
    Bank Qualified —
    Day Count Basis —

    Coupon Features

    Coupon Type FIXED
    Current Rate Effective Date 12/22/2011
    Reset Frequency —
    Benchmark Reference —
    Benchmark Formula —
    Next Reset Date —
    Next Reset Rate —
    Minimum Rate —
    Maximum Rate –

  87. I got the CUSIP today in my account, matches the circular, 769368AF7. Still waiting for the odd lot cash. ETrade bond desk feels it is the last part to roll in as each account will have a different amount.

  88. Are people selling the new bonds for $76.00? I think that is what I am seeing on Fidelity?

  89. What is the status of bonds that were not exchanged?

  90. Same question as D. Charney. I received my consent forms in USPS mail too late (past the date) so I still hold the old bonds. No interest payment (Nov 2011) yet. So what does RiverRock plan to do with those? Nothing?

  91. At the time, I contacted the law office that arranged the exchanged for RREA. The attorney, or clerk, discouraged me for holding on to my bonds. Eventually, he acknowledged there’s no clear resolution to what’s going to happen to the bonds, other than losing ranking among RREA’s debt, but maintaining the same (past) maturity, coupon, and requiring payment of interest. It’s a strange situation. I did not exchange any of my 50 bonds. I don’t want to be chained to this shady organization’s debt for another five years+. My family and I depend on this money. Once the dust settles over this exchange offer, RREA might be forced to deal with the residual, defaulted debt and pay it off to clear it off their books in order to repair their current default rating with Moody and S&P. But it won’t happen naturally. You need to write the “Trustee” (US Bank) and the specific analysts at Moody’s and S&P to remind them that there are individual creditors that did not agree to the “offer”, that RREA took money from and doesn’t want to return it to as obliged.

  92. I emailed US Bank and asked them what legal action they were taking, as trustee, to get my interest and principal payment. I will post their response. I do not know if we can take any individual action against the Authority. Indian Nations are not subject to US courts.

  93. BTW, the odd lot cash rolled in about a week late

  94. I filed an on-line complaint with the SEC regarding the lack of information and no interest or principal payment. They have the funds, they are just not paying debts. I left a message on the Authority’s phone, but no response. Maybe the Tribe thinks we will all go away.

  95. I spoke with the Trustee yesterday; he had no idea what the Authority was planning do with respect to the Notes that were not exchanged. It is clear they owe the money for interest and principal and they have enough cash to meet their obligation. There are about $3M, of notes that were not exchanged. Maybe someone need to start legal action so that Authority knows this is going to get costly.

  96. I corresponded with the Trustee too (aside from writing to Moody and S&P to make sure the default rating stays as due debt is not being paid back). He provided the same response, basically that it is a wait and see game (my choice of words). My opinion is that RREA wants to let some time run with the intention that: (1) the holdouts might give in and also subscribe to the “offer”, and/or (2) paying off the remaining holdouts will not aggravate the majority of investors who had taken the “offer” under the gun. However, I’m not going to wait longer than the end of April, at which time I’m considering contacting an attorney at law. If anyone here considers joining resources in that direction, please write to me directly at luke.sm555@gmail.com

  97. A redemption of 1,000 bonds at 100 occurred this past week in my account. I receive no notice of anything. Any idea why this happened? Was there some call?

  98. Optional Redemption . . . . . . . . . . . .
    On or after November 1, 2015, we may, at our option, redeem
    some or all of the New Notes at the redemption prices set
    forth in this Offering Circular, plus accrued and unpaid
    interest, if any, to the redemption date. Prior to November 1,2015 we may, at our option, redeem some or all of the New
    Notes at a redemption price equal to 100% of the principal
    amount of the New Notes to be redeemed, plus a‘‘make-whole’’ premium and accrued and unpaid interest, if
    any, to the redemption date. See ‘‘Description of the New
    Notes—Optional Redemption.’’

    Mandatory Redemption . . . . . . . . . . On each interest payment date, beginning on May 1, 2012, we will be required to redeem Series A Notes and Series B Notes on a pro rata basis with 90% of Excess Cash Flow (as defined herein) for our two most recently completed fiscal quarters if our Cash Flow (as defined herein) for our four most recently
    completed fiscal quarters is at least $50.0 million, or with
    100% of Excess Cash Flow for our two most recently
    completed fiscal quarters if a default or event of default has occurred and is continuing or if our Cash Flow for our four most recently completed fiscal quarters is less than
    $50.0 million, in each case, at a redemption price equal to
    100% of the principal amount of the New Notes to be
    redeemed, plus accrued and unpaid interest, if any, to the
    redemption date. In addition, we will be required to redeem
    all of the New Notes within 45 days after receipt by us of
    written notice from the Trustee of a Determination of
    Taxability at a redemption price of 100% of the principal
    amount thereof, plus accrued and unpaid interest to the date
    fixed for redemption. See ‘‘Description of the New Notes—
    Mandatory Redemption—Upon Determination of Taxability.’’

  99. So it looks like this mandatory redemption is kicking in, which is good, right?

  100. Congratulations. You won the redemption lottery. The mandatory redemptions are a good thing, first because it improves the cash flow fixed charge coverage of the bonds, and second because it shows that the casino is capable of complying with the terms of the restructuring, which should improve the confidence of the market, and of course at this rate 60% of the bonds will be redeemed before their time.

    I wish I’d won.

  101. Jeffery,

    I also received a redemption but it represented about 5% of my holdings which is about the amount of float that was retired (~5 million of the 9%). If you had 1000 redeemed and that represents 5% of your stake you must own 20% of all the bonds. I was worried that my RR bond stake was approaching 8% of my total assets. If you are at my worry point you must have about 175mm. I don’t think I’ll be able to catch you :)

  102. Luke, any luck with the attorney?

    From the Q1 report it appears that the old bonds (~3.6mm) will be redeemed after the senors are retired. They are carrying accrued interest on the books so I assume the redemption will include the accrued interest. Kinda like a zero coupon bond. I saw some of these bonds available on Etrade bond desk but don’t remember the price. By my calc, taking into account the mandatory redemptions on the 9% at about 5% per 6 mo period, and the current price for the 9% bond the old bonds would have to price around 46 to be equivalent. You should just do the conversion. Just my two cents.

  103. On interest payment date 11/1/12 I had 10% of my bonds also redeemed


  104. More bond redemptions coming per this October 2012 notice?

    SERIES A NOTES DUE NOVEMBER 1, 2018 CUSIP #768369AF7 and
    NOTICE IS HEREBY GIVEN to the holders of the Authority’s Series A Senior Notes due 2018 (the “Series A Notes”) and the Authority’s Series B Senior Notes due 2018 (the “Series B Notes” and together with the Series A Notes, the “Notes”) issued pursuant to that certain Indenture, dated December 21, 2011 (the “Indenture”), between River Rock Entertainment Authority (the “Authority”), an unincorporated governmental instrumentality of the Dry Creek Rancheria Band of Pomo Indians, a federally recognized Indian Tribe (the “Tribe”) and Deutsche Bank Trust Company Americas, a state banking corporation duly organized and existing under the laws of the State of New York, as trustee and paying agent (the “Trustee and Paying Agent”), that the Authority has deposited $11,014,000 with the Trustee which the Trustee shall apply on November 1, 2012 (the “Redemption Date”) to the partial redemption of the Notes at par (the “Redemption Price”) pursuant to Section 3.10 of the Indenture. Based on the current outstanding amount of Notes being $181,259,000, of which $92,903,000 are Series A Notes and $88,356,000 are Series B Notes, the Trustee and Paying Agent shall apply the Redemption Price as follows, or as close to pro rata as is practicable pursuant to Section 3.02 of the Indenture: $5,650,000, or 51.3% of the Redemption Amount, shall be applied to redeem Series A Notes; and $5,364,000, or 48.7% of the Redemption Amount, shall be applied to redeem Series B Notes; provided that the Notes shall be selected in amounts of $1,000 and integral multiples of $1,000.
    Dated: October 26, 2012 By: Deutsche Bank Trust Company Americas,
    As Trustee

  105. Q3 results as well as the conference call replay are now available on their web site. There were no analyst questions on the conference call. It appears that that Wall St. has lost interest in this issue since they are no longer doing SEC filings and it is no longer rated by any ratings agencies.

    Q3 results were very solid. EBIDTA was comparable to last year and would have been considerably better if not for additional reimbursement of costs to Sonoma County. Management seems to be very focused on reducing costs and improving operations before the expected opening of the Rohnert Park Casino in Nov 2013. Interest costs are declining as they keep calling more bonds (about 5.8% of the total on the 11/1 call).

    I am covering River Rock in my newsletter which is focused on high yield and deferred interest issues. The partial calls of River Rock bonds at par increase the internal rate of return of the issue which is higher than the listed yield to maturity. I have setup an Excel model to calculate the IRR including the partial calls. Email me at mrpanick@yahoo.com if you’d like me to email you a free copy of my newsletter as well as the River Rock Excel IRR model.

  106. Please forgive my ignorance. I own only $5000 of RIVER ROCK ENTMT AUTH CAL*BE 9.7511012011 (CB69AB). They are valued at $3,750.00. I am unable to get any information on this investment and am unable to trade it. Based on the information above, should I be expecting any redemption of any part of my investment? Thanks for your patience.

  107. Phillip,

    About 5% of the issue is being partially called every 6 months at par. This happens with each interest payment and the amount called is based on a cash flow formula in the indenture. Next partial call and interest payment are May 1st. The call is by a lottery so more or less than 5% can be called from your account when a call is made.

    You should be able to trade it by calling your broker’s bond desk with the CUSIP. River Rock has financial and other information on their web site if you setup an account on the IR section there. My newsletter is following the River Rock bonds (one of my top picks in fact) and other distressed issues trading at a discount. You can email me for a sample copy and more info. If you want email alerts and analysis on breaking news and earnings of River Rock and similar issues, a writeup and an updated Excel internal rate of return model (taking effect of partial calls into account).

    Email is mrpanick@yahoo.com


  108. Fantastic Q4 report. Highest quarterly revenues and operating earnings in the past 2 years even though Q4 is a weak seasonal quarter.

    More detailed analysis and an Excel IRR model in my newsetter covering this and other microcap distressed debt and equity issues. Email is mrpanick@yahoo.com for more info.


  109. Anyone have any insight as to the effect of the new casino set to open in November on the RR revenues? I would think after this November bond redemption that the debt load will be low enough to handle the reduced revenues/earnings.

  110. River Rock redeemed another 1000 bonds at $100 in my account. I don’t understand why the bond price is around 81 when the company is redeeming at 100. Where can I buy more at $81 so I can wait for my $100 redemption? My broker can’t find it anywhere.

  111. Recent weakness in the River Rock 9% bond a week before the 4th quarter conference call???

  112. The weakness in the bonds was well deserved. If you compare Q3 revenues to revenues for the trailing 3 months (which was lower than Q4 and discussed in the annual report) they lost 50% of revenues. That’s a tough hurdle to overcome. The River Rock bonds were dropped as a pick in my newsletter in May at 88 for a big gain. The Panick Value Research report is still covering them as a “watch list” issue with a near term target of 50 and a sell recommendation. A sell alert with a 50 price target went out as soon as the annual report came out earlier this week. Probably wouldn’t touch it even below 50. If you trade distressed debt and pref stock issues check out the Panick Report. The FBP pref issues which just had a big rally today have been a pick. My email is mrpanick@yahoo.com for the 2 week free trial. Back alerts on River Rock included on request.

  113. Anyone still following this Bond? I got a coupon payment today, but the price has dropped to about 50 cents on the dollar.

  114. I think I figured it out – this just came out — http://www.pressdemocrat.com/article/20140501/articles/140509955#page=2

  115. @BigBill, probably an ETrade account? They pay before they get the money from the Trustee then reverse the transaction in a few days when it doesn’t show up.

  116. River Rock bonds showing at 0.37 to the dollar. They have to May 31st to resolve the default. At least some of my bonds were redeemed at par last two years. Let’s hope they come up with another creative financing that does not haircut the bond holders. They claim to have enough money to keep operating so it’s not in their interest to screw the bondholders unless they want to do future financing at 25%.

  117. River Rock has defaulted.

    However, while I can’t recommend buying bonds (LOL), there is mention of a “waterfall” provision that will protect the bondholders interests as much as possible and likely induce the Tribe to restructure (assuming they can).

  118. The bonds are down below $20, which seems insane. I think some are just dumping for whatever they can. What’s odd is when there was no negative news 6-9 months ago, the bonds were selling for $80-$84 but I cannot find any brokers that actually had bonds to sell.

  119. Why is there no new forthcoming on a possible solution to the default? I guess it is business as usual at the casino and screw the people that are owed two hundred million? Waterfall agreement?????

  120. Since they do not publish any financial data no one can make any decesions based on facts. We are just pawns with no real power, they may say something today or 2 years from now who the hell knows.

    I at one time could see financials by logging in and searching website that has been shut down.

  121. Update to last input. I was just successful in finally getting my password to work. Read info that was available, no mention of a time schedule concerning bonds, however there was an excess cash flow statement.


  122. Nothing new posted on the investor website for River Rock since May 28, 2014, however the earlier post suggesting the website was “down” is not accurate. You do need a password to access the investor section which you can get by emailing the company.

  123. So, RR bonds trade @ 15 ask 10 bid in the last month or so. Most of these transactions are for 5-10 bonds, so not much money changing hands. Have not seen any big blocks traded since the default so it appears the big institutional investors are sitting still. It also appears they are quite nonchalant about the situation based on the questions I heard them ask in the conference calls.

    So they said the parity lien account had 4 million deposited into it at the end of July. Worst case the casino machine generated 4 million in 2 months to pay the bondholders. That is $24 million a year. There are about $140 million face senior bonds with an interest burden of about $12 million annually.

    Why are these bonds not a good deal @ $15? Even if you never got your principal back, you will be repaid your initial investment in about 2 years, that’s a pretty nice annuity.

    Any thoughts??

  124. Why are these bonds not a good deal @ $15?
    Because they are not making enough money at the casino.

    They are not generating $4M/month in free cash flow. That’s a one time transfer at best.

    Check out the income statement and statement of cash flows from the investor site (and reconciliation of income to net cash flow provided by operations….

    They are negative cash flow after adding in transfers to the tribe (which happened) and payments to the county (which did not happen). That’s before bondholders have seen $0.01.

  125. They are required by the indentures to deposit at the end of each month. They defaulted on 5/1/14, made it official on 5/31/14. At the end of june, they did not transfer any money into the parity lien account, then on 7/31/14 they transferred $4 million. Where did it come from?

  126. Who thinks there will be a distribution on 11/1?

  127. There was no distribution in November. Nothing but silence but the major bondholders must be talking to them.

  128. There was a distribution on 11/25. 1.6% of face about 1/3 of a normal 6 month payment. That was a major portion of the 4.9 million in the parity lien account but not all of it. There is a new trustee and a bondholder advocate. They provide announcements periodically on the state of affairs.

  129. I did get that payment on December 1st, better than nothing.

    Do you have a link to the new bondholder advocate. I see nothing about that on the investor affairs websites for River Rock.

  130. 1.5% of face paid on 4/15/15. Represented 2.1 million out of the parity lien account. There was 3.6 million in the account as of 12/31/14, so at least 1.5 in there now.

  131. Ditto got the payment.

  132. Also bond price creeped up to 12 dollars from $10.50 but might just be a fluctuation.

  133. Another distribution (the 5th since the default) on 2/26/16, 1.89% of face. That was 2.6 million out of the parity lien account. They left 2 million in for reserve.The payments keep coming and they are regular. The advocate has indicated that they want to try and establish a bimonthly payout schedule in the near future. Before the default the yearly debt service was about 12 million for the senior notes. Since the 5/1/14 default, in 1.833 years there have been 16.4 million distributed and 2 million in reserve for a total of 18.4 million. This represents 84% of what they are supposed to payout (~22 million) before default. Not bad considering you can pick up these bonds at 1/8 face value.

  134. I saw a trade go through today at $14.14

  135. Well you pick them up Bob S at $10. LOL
    I still see $7.40 as the value on Option Express.
    I did get $185 credited on 3-2-16 on 100 bonds.
    Still these are doing better than oil/gas investments right now.

  136. Etrade has them at 21.996 ask 10.125 bid. A lot higher than a week or so ago.

  137. Last April distribution was .3% of face or 3% market price. They are going to try to do an even month distribution from now on. Should see one coming up in June. After 2 or 3 of these should be able to extrapolate a realistic yearly return.

  138. The distribution on 6-29-16 was only $33 on 100 bonds. That’s only a third of a percent, much less than last time.

  139. Distributions on 8-26-16 and 10-25-16 were $33.56 and $56.75. So a little over 1% for 2/3rds of the year. If we end up around 1.4% tax free that will be tolerable I suppose and then hope for redemptions.

  140. After small distributions in Feb & April 2017, nothing in June, suddenly a $166 payment in August 2017. That’s $221 so far in 2017 or about a 2.2% return so far tax free. Could be worse. Hope we get another payment end of October.

  141. That’s 2.2% of face, 11% on market. Not bad, the Oct payment should be coming soon. I think the reason there was no June pmt was the parity fund was just shy of $2 million. They like to leave $2m in the fund. So the August pmt was essentially two payment rolled into one.

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