2014 J.P. Morgan Global High Yield & Leveraged Finance Conference February 26, 2014

Transcription

1 2014 J.P. Morgan Global High Yield & Leveraged Finance Conference February 26, 2014

2 MTGA Overview MTGA: Premier Tribal Gaming Operator High Quality Built to Last Gaming Assets Leading Market Share/Fair Share/Operating Margins in its markets Stable Governance, Transparent and Commercial Mohegan Tribe is a Leader in Indian Country Focused Deleveraging Strategy and Cost Saving Initiatives Rapid Deleveraging Recently Expiration of Relinquishment Payments in January 2015 Strong Corporate Assets compared to Other Tribal Operators Strategic Cost Saving Initiatives and Improved Margins Diversification Through Capital-Light Growth Pipeline Mohegan Gaming Advisors Resorts Casino Market8 Casino Management Revere Casino Development Cowlitz Casino Development Pocono Downs Hotel Mohegan Sun Hotel & Retail 2

3 MTGA: Premier Tribal Gaming Operator The Mohegan Tribe of Indians of Connecticut Widely considered one of the strongest and most stable tribal governments in the United States Commercially licensed government with low turnover Elected 9-member Tribal Council governs the Tribe and acts as the Management Board of MTGA Staggered 4 year terms, next elections in August 2015 Mohegan Tribal Gaming Authority (MTGA) One of the strongest management teams in Indian Country operating two high-performing casinos Mohegan Sun on reservation land in Uncasville, CT Pocono Downs on commercial land in Wilkes-Barre, PA SEC filer, values its lender relationships and has always complied with bank and bond covenants Mohegan Sun is one of the largest gaming facilities in the U.S. and includes one of the highest grossing arenas in the world of its size (home to the Connecticut Sun WNBA franchise) Well-known Mohegan Sun brand with 4 million+ high-value customers in Player Database 3

4 MTGA: Premier Regional Assets 4

5 MTGA: Premier Tribal Gaming Operator Based on the fair share (number of slot machines offered), Mohegan Sun and Pocono Downs are in line with the competition However, both properties outperform the competition by measure of slot win efficiency Connecticut Northeastern PA Mohegan Sun MSPD Win Efficiency: 111% (Fair Share: 48%) Win Efficiency: 90% (Fair Share: 52%) Win Efficiency: 111% (Fair Share: 55%) Win Efficiency: 87% (Fair Share: 45%) Primary Competitor Primary Competitor Results for LTM period ended January 31,

6 MTGA: Premier Tribal Gaming Operator Despite economic and competitive headwinds, MTGA has grown EBITDA over the past five years MTGA Gross Revenue ($ in millions) $1,750 MTGA Adjusted EBITDA ($ in millions) $350 $1,625 $1,500 $1,375 $1,540 $1,527 $1,499 $1,436 $1,438 $1,426 $325 $300 $275 $283 $322 $314 $313 $306 $294 $1,250 $250 $1,125 $225 $1, LTM 2014 (1) $ LTM 2014 (1) (1) Represents last twelve months ended December 31, 2013; Management estimates that period was negatively impacted by unusually low table games hold in Q1 FY14 ; normalized amounts shown above 6

7 Margin Expansion Due to Proactive Cost Saving Initiatives Disciplined approach to cost containment, while maintaining superior service and customer experience Workforce reductions at Mohegan Sun and Pocono Downs Changes to the slot mix on the gaming floor, increasing slot win with the same overhead costs Modification to medical benefits Replacement of Mohegan Sun-owned or operated food and beverage outlets with 3rd-party operators Cost saving initiatives reflect continued focus on increasing Adjusted EBITDA and margins September 2012 initiatives at Mohegan Sun resulted in savings of ~$25 million annually March 2013 initiatives at Pocono Downs resulted in savings of ~$7 million annually Adjusted EBITDA Margin Mohegan Sun Pocono Downs Consolidated 30.0% 25.0% Impact of cost saving initiatives 25.6% 24.9% 22.3% 27.0% 26.7% 25.8% Property ramp-up and introduction of table games 22.7% 22.4% 23.4% 22.8% 20.0% 15.0% 15.4% 17.0% 18.6% 19.0% 18.9% 19.9% 22.1% 10.0% LTM 2014 (1) LTM 2014 (1) LTM 2014 (1) (1) Represents last twelve months ended December 31, 2013; Management estimates that period was negatively impacted by unusually low table games hold in Q1 FY14 ; normalized amounts shown above 7

8 Balance Sheet: Capital Structure & Liquidity Recently completed refinancings will reduce interest expense by $16M annually ($ in millions) 12/31/13 Leverage (2) Cash $ 75.6 Credit Facility Revolver ($100M) due 2018 (1) 14.0 Credit Facility Term Loan A due Credit Facility Term Loan B due Total Secured Debt x 9.75% Senior Unsecured Notes due % Senior Subordinated Notes due % Senior Subordinated Stub Notes due %Senior Subordinated Stub Notes due Relinquishment Liability 68.3 Capital Leases 11.5 Line of Credit 9.4 Other Liabilities 2.7 Total Recourse Debt 1, x Non-Recourse Debt 73.0 Total Debt $ 1, x (1) Revolver liquidity was $73.8M as of 12/31/13 (2) Based on Covenant EBITDA of $309.5 M for the LTM 12/31/13 period 8

9 Balance Sheet: Total Leverage (1) 7.5x MTGA Focused on Deleveraging 7.0x 7.0x 6.7x 6.5x 6.0x 6.3x 6.0x 5.8x 6.1x 6.0x 6.2x 6.2x 6.2x 5.9x 6.0x 5.7x 5.5x 5.0x 4.5x (1) Restricted Group leverage, based on unannualized covenant EBITDA (2) Beginning 12/31/2013, Total Leverage is calculated in accordance with the 2013 Credit Facility, which excludes Relinquishment Fees and includes Relinquishment Liability in Total Recourse Debt 9

10 Strong Collateral Relative to Tribal Gaming Operators MTGA s corporate assets are arguably the strongest in Indian Country and approach that of smaller commercial operators Typical tribal collateral includes: Revenue Pledge, Security Agreements, Deposit Accounts MTGA collateral includes: Revenue Pledge, Security Agreements, Deposit Accounts PLUS - Pocono Downs, appraised at $482 million (August 2011, as-stabilized value) - Equity, certain cash flows and receivables from the Cowlitz Casino Development - Equity in MGA, which is pursuing additional capital-light opportunities - Leasehold Mortgage in CT relating to gaming and non-gaming assets (1,200 room hotel, 42 restaurants and lounges, 36-outlet retail mall, 10K seat arena, convention/meeting space) - Future interests in wholly-owned commercial development projects 10

11 Estimated First Lien Collateral Coverage First lien debt as of December 31, 2013 was covered by MTGA s collateral package, which has a estimated value of $883 million ($ in millions) $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $482 Pocono Downs $173 $193 CT Hotel CT Mall Golf Course $14 $21 $955 (fully-drawn revolver) Cowlitz Receivable $869 First Lien Debt 11

12 Capital-Light Growth Strategy Project / Expansion Location Primary Market Population (1) Ownership Structure Status Est. Opening Benefit to Credit Group Resorts Casino Management Pocono Downs Hotel Internet Gaming Mohegan Sun Hotel / Retail Cowlitz Casino Development Atlantic City, NJ % equity Completed Open Wilkes-Barre, PA NJ TBD CT Proprietary PA Proprietary Uncasville, CT NA NJ 8.8 CT 3.6 PA 12.7 NA La Center, WA % equity, Non-recourse debt NJ 10% equity CT 100% equity PA 100% equity Third-party financing 49% of management company Completed In development Planning stage Pending litigation Open NJ 2014 CT 2015/16 PA 2015/ /17 Through MGA (2) Profits after lease payment 100% of equity NJ through MGA CT credit group PA credit group Profits after lease payment Development fee Management fee >$20m receivable 49% equity Market8 Casino Management Philadelphia, PA 5.9 JV, TBD Pending RFP application 2016/17 Through MGA (2) Revere Casino Development Pending RFP Revere, MA 4.5 JV, TBD 2016/17 application Through MGA (2) Illustrative 5-year Timeline (Estimated) Resorts Casino Management Pocono Downs Hotel Internet Gaming (1) In millions. Represents population within 60 minute drive time or MSAs and state population from US Census. (2) Mohegan Gaming Advisors, LLC ( MGA ) are unrestricted subsidiaries that are wholly-owned by the credit group. Mohegan Sun Hotel Expiration of Relinquishment Payments Cowlitz Casino Development Revere Casino Market8 Casino Management 12

13 Mohegan Gaming Advisors: Resorts Atlantic City In October 2012, MGA acquired 10% of Resorts Atlantic City for $5 million and entered into management agreement MGA directed $60M+ expansion: May 2013 Room remodel complete Memorial Day/June 2013 Jimmy Buffett s Margaritaville LandShark Bar & Grill (AC s only year-round beach bar) 5 O Clock Somewhere Bar Spring Food Court will be fully opened Drive significant additional revenue to Resorts by moving thousands of Mohegan customer Atlantic City trips to Resorts from other Atlantic City casinos Since May 2013, Resorts has consistently outpaced the market 13

14 Pocono Downs Hotel Project Pocono Downs Hotel 238-room midscale hotel & 20,000 square foot event and meeting space Opened on time on November 15, 2013 On budget of $50 million including construction period interest and fees Non-Recourse Debt financed outside the restricted group Elevate the status of the property, attract the highest value gaming patrons for longer stays and capitalize on the lack of quality hotel product in the local area 14

15 Mohegan Sun Expansion Projects Mohegan Sun Expansion Negotiations ongoing on third-party financed hotel and retail expansion Anticipated groundbreaking in %+ occupancy at existing 1,175 room AAA Four-Diamond luxury hotel over each of the last 8 years; additional rooms necessary to satisfy unmet hotel demand Non-gaming orientation of new hotel will create less dependence on casino guests and insulate against competition 15

16 Cowlitz Project Overview Project Background Cowlitz Tribe has received a Record of Decision from the BIA to place land in trust, challenged by litigation Project financing and development efforts will ramp-up following the finalization of the land-into-trust process Proposed casino would be closest large-scale gaming facility to Portland, Oregon Underserved market with approximately 2.3 million people within a 60 minute drive Full gaming (slots, tables and poker), effective gaming tax rate of approximately 4% Economic Summary MTGA is a 49% equity partner in Salishan-Mohegan, the management company for the Cowlitz casino Reimbursement of all MTGA invested capital, over $20 million to date, plus interest Development Fee 3% of Project Costs (MTGA will receive 100%) Management Fee 24% of net revenues (as defined by the NIGC) for 7 years to credit group Proposed Site 16

17 Cowlitz Project Proposed Site 17

18 Revere, Massachusetts Project Overview Project Background State authorized up to 3 destination casinos and 1 racino in Nov 2011; min $500M investment and $85M license fee required for the destination casinos Full gaming (slots/tables/poker) for destination casinos, hotel required, gaming tax rate of 25%, no smoking Announced JV with Brigade Capital Management in January 2013 to pursue the license award In November 2013, announced agreement to apply for East Region license at Suffolk Downs site in Revere, Massachusetts Underserved market with approximately 4.5 million people within a 60 minute drive Two-stage RFP process began in Oct 2012; Filed our RFA-2 in December 2013; Revere referendum Feb 25, 2014; license awarded in spring of 2014 Existing Mohegan Sun ~4mm player database - 50%+ comes from New England - creates immediate value for state as well as valuable cross marketing synergy together with respected Mohegan Sun brand Proposed Site 18

19 Connecticut Properties: Geographic Makeup Although only ~9 miles apart, the geographic makeup of customers at the two Connecticut properties differ due to varying highway access and other factors Mohegan Sun Primary Competitor RI Other 7.7% 3.1% RI Other 8.4% MA 18.0% CT 11.7% 38.0% CT 52.4% 18.8% 32.1% 9.8% NY Source: Mohegan Sun (Results for LTM Period Ended January 31, 2014) MA Source: UMASS Dartmouth Center for Policy Analysis (2013 New England Casino Update) NY 19

20 Expectations for Mass Casinos Impact on Mohegan Sun Similar number of machines caused a ~6% reduction in New York exposure, or approximately one-quarter of previous business MTGA has less exposure to Massachusetts than it did to New York in 2006 No smoking allowed in Massachusetts casinos Roll-off of relinquishment liability and cash flows from capital light projects likely to offset MA impact New York Massachusetts Number of Facilities Number of Slot Machines Estimated Opening Date Gaming Tax Rate Drive Time to Key Locations Smoking Revenues Exposure Before Competition Revenues Exposure After Competition Difference 2 4 ~10,000 ~10,000 Empire City: Oct 2006 Resorts World: Oct % effective 25% Empire City: 2 hours Resorts World: 2.25 hours No No 24.8% (LTM Sept 2006) 18.7% (LTM June 2013) Mid 2016 Early 2017 Springfield: 1.25 hours Boston: 1.75 hours 18.3% (LTM June 2013) TBD 6.1% TBD 20

21 Thank You and Q&A