Item
2.04. Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On
February 26, 2009 Riviera Holdings Corporation (the “Company”) received a notice
of default, (the “Notice”) from Wachovia Bank, National Association ("Wachovia")
with respect to that certain Credit Agreement, dated June 8, 2007 (the “Credit
Agreement” together with related security agreements and other credit-related
agreements, the "Credit Facility"), entered into by the Company; its
subsidiaries Riviera Operating Corporation, Riviera Gaming Management of
Colorado, Inc. and Riviera Black Hawk, Inc. with Wachovia, as administrative
agent and as the sole initial lender (before giving effect to loan
participations); Wells Fargo Foothill, Inc., as syndication agent; CIT Lending
Services Corporation, as documentation agent; and Wachovia Capital Markets, LLC,
as sole lead arranger and sole bookrunner. (Since the closing of the Credit
Facility, additional financial institutions have been added as lender
participants.)
The
Notice alleges that the Company failed to comply with Section 6.14 of the Credit
Agreement by failing to provide a Deposit Account Control Agreement (a “DACA”)
from each of the Company’s depository banks per a request made by Wachovia to
the Company on October 14, 2008 (the “Default”). Section 6.14 of the
Credit Agreement provides, in relevant part, that each of the Credit Parties
(which includes the Company and is further defined in the Credit Agreement)
“agrees to enter into Deposit Account Control Agreement, from time to time, to
the extent reasonably requested by [Wachovia] or the Required
Lenders.” The Notice further provides that as a result of the
Default, the Company will no longer have the option to request LIBOR Rate
loans.
This
asserted Default is technical, not financial, as the Company is current with its
interest and payment obligations associated with the Credit Agreement.
On
October 14, 2008, approximately 16 months following the closing of the Credit
Agreement, Wachovia requested that the Company execute a DACA in a form that the
Company ultimately determined to contain unreasonable terms and
conditions. After reviewing the proposed DACA, the Company and its
advisors determined that the DACA was not reasonable in that it would enable
Wachovia to access all of the Company’s operating cash and order it to be
transferred to a bank account specified by Wachovia.
The
Credit Facility consists of a $225 million seven-year term loan ("Term Loan"),
and a $20 million five-year revolving credit facility ("Revolving Credit
Facility") under which the Company can obtain extensions of credit in the form
of cash loans or standby letters of credit. At the time of the
Notice, the outstanding balance on the Term Loan was $225.0 million and the
outstanding balance on the Revolving Credit Facility was $2.5
million. As a result of losing the availability of LIBOR Rate loans
under the Credit Facility, the current interest rate on the Term Loan will
increase from approximately 7.5% to 8.5% and the interest
rate for the Revolving Credit Facility will remain the same.
On March
4, 2009, the Company issued a press release (the “Release”) regarding the
Notice. A copy of the Release is furnished as Exhibit 99.1 of
this report.
Item
9.01. Financial Statements
and Exhibits.
(d) Exhibits
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Press
Release issued by Riviera Holdings Corporation on March 4,
2009.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
March 4, 2009
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RIVIERA
HOLDINGS CORPORATION
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By:
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Phillip
B. Simons
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Treasurer
and Chief Financial Officer
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