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|Subject: Updates onf River Rock bonds||Date: 5/4/2012 8:42 AM|
|Author: folgore||Number: 34037 of 35117|
A couple of interesting developments with the River Rock bonds that myself and persistentone have. As will be recalled, the bonds that should've matured late 2011 were, instead, replaced by an equal number of bonds at a lower interest rate because of problems that the River Rock Casino had in refinancing their debt. Later, things got worse as persistentone noted when they stopped complying with the SEC and are, thus, no longer rated by S&P, Moody's, Fitch, etc.
I've continued to hold the bonds though the value in now less than 70% of par. My feeling has been that the value of the bonds will ultimately bounce back after River Rock demonstrates it still intends to make its interest payments on time. The first of these payments came due on 01 May and they did indeed make an interest payment, but it was less than what was owed. The bond is supposed to pay 9% interest via semi-annual payments which - I assume - would mean two 4.5% payments. Instead, the payment was more like 3.25%.
One thing that was mentioned with the newly-issued bonds was that some of them might be redeemed early. In a previous post, persistentone commented:
I'm very interested to see how they actually implement this requirement to buy back debt with excess EBITDA.
On May 2, I received a message via Etrade that my position was subject to a "partial call lottery." This morning, I found that one of my River Rock bonds was called at par, so apparently my number came up. That, at least, was a positive development.
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