Mystique Casino Refinance Existing Debt RequestMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Mystique Casino
DATE: September 2, 2010
Dubuque
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In accordance with the City lease agreement, Mystique Casino President & CEO Jesus
Aviles is requesting City Council approval for two separate loans with American Trust
and Savings Bank to refinance existing debt and to fund the recent remodeling of the
Mystique Casino.
Jesus has assured the City that the debt structure and payment schedule is consistent
with the projections provided the City during the recent lease amendment negotiations
and the security is similar to past loans.
believe that the Dubuque Racing Association, the City and charities will all benefit from
this refinancing.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mich el C. Van Milligen
MCVM:jh
Attachment
cc: Jesus Aviles, President & CEO, Mystique Casino
Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
August 26, 2010
City of Dubuque
Attn: Mayor Roy Buol and City Council
50 West 13 St.
Dubuque, IA 52001
Dear Mayor Buol and City Council Members,
In accordance with the Lease Agreement between the City of Dubuque and Dubuque Racing
Association, I am requesting approval from City Council for the loans in the amount of
$5,000,000 and $14,911,173.02 with American Trust & Savings Bank and Dubuque Bank &
Trust, at the September 7, 2010 City Council meeting.
Attached is a signed copy of the proposal from the lenders, outlining the details of the loan for
your consideration. This proposal was recently approved by the Dubuque Racing Association
Board of Directors on August 17, 2010.
If you have any questions pertaining to the information provided, please contact me at 563-
585 -2955 or on my cell at 563 - 663 -4060 at anytime. Thank you for your time and
consideration!
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1855 GREYHOUND PARK RD. DUBUQUE IA 52001 - 4(e - 800 - 373 -3647 WWW.MYSTIQUEDBQ.COM
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295 Maio Street
P.O. Box 932
Dubuque, Iowa S2004-0938
August 6, 2010
Mr. Jesus Aviles, President and CEO
Dubuque Racing Association
1855 Greyhound Park Road
Dubuque, IA 52001
RE: Refinancing
Dear Jesus:
Loan 1
Borrower
Dubuque Racing Association, Ltd.
Purpose
To provide financing for the build -out of the Mystique Casino
Amount
United States Five Million Dollars and no/100s ($5,000,000.00)
DUUUOUEBAUK &TUUS1'
Great Things Happen! '
1398 Central
P.O. Boer 772
Dubuque, Iowa 52004 -0772
American Trust & Savings Bank and Dubuque Bank & Trust Company are pleased to
provide financing for the renewal of your existing credit facilities. American Trust &
Savings Bank will serve as the lead bank and participate in the credit facility with
Dubuque Bank & Trust Company. As we discussed, we will divide the loan into two
notes. The rates and terms are outlined below:
Rate and Tenn
American Trust & Savings Bank and Dubuque Bank & Trust Company are offering a 5-
year variable rate loan. The initial interest rate will be 6.25 percent per annum and will
adjusted daily based on the base rate of corporate loans posted by at least 70 percent of
United States Banks known as The Wall Street Journal Prime plus 300 psis points. The
interest rate will have a floor rate of 6.25 percent and a ceiling of 7.75 percent. Interest
will be calculated on an actual/360 -day basis.
Mr. Jesus Aviles
August 6, 2010
Page 2 of 4
This loan will be set up on a Sweep with the operating accounts of the Dubuque Racing
Association, Ltd. ( "DRA "). Balances in the DRA account will be swept on a daily basis
to and from the loan account based upon parameters to be established between American
Trust & Savings Bank and the DRA.
Loan 2
Borrower
Dubuque Racing Association, Ltd.
Purpose
To provide financing for the build -out of the Mystique Casino
Amount
United States Fourteen Million Nine Hundred Eleven Thousand, One Hundred Seventy -
Three and 02 /100s ($14,911,173.02)
Rate and Term
The interest rate will be fixed for ten years at 8.125 percent per annum. The amortization
on the loan will be ten years. Monthly payments will be approximately $182,820. The
Borrower has the option of prepaying principal for the entire year on the first day of each
scheduled year. Prepayment of additional principal is limited to twenty percent of the
outstanding loan balance in any given year. Interest will be calculated on an actual/360
day basis.
Prepayment Penalty
Other than prepayments as described above, the Borrower will be subject to a prepayment
penalty of three percent of outstanding principal balance during year one, two percent
during year two, and one percent thereafter if refinancing with another lender. This
prepayment penalty will be waived if the Dubuque Racing Association, Ltd. is seeking to
refinance the entire facility in conjunction with an acquisition of significant nature.
American Trust & Savings Bank and Dubuque Bank & Trust will have the opportunity to
bid on any such refinancing activity.
Security
The loan(s) will be secured by a blanket first security position on all assets of the
Dubuque Racing Association, Ltd..; an Assignment of Lease Agreement by and among
Dubuque Racing Association, Ltd. (as Lessee), the City of Dubuque (as Lessor), and
American Trust & Savings Bank (as Bank); a Negative Pledge Agreement between the
Dubuque Racing Association, Ltd. and American Trust & Savings Bank (as Bank); and a
Collateral Pledge Agreement on Money Market Investment Account held at Bank
between The Dubuque Racing Association, Ltd. and American Trust & Savings Bank.
Mr. Jesus Aviles
August 6, 2010
Page 3 of 4
Closing Costs
All direct closing costs associated with the transaction will be the responsibility of the
Borrower. The Bank will be reimbursed by the Borrower for all out -of- pocket costs and
expenses incurred by the Bank in connection with the loan, including, but not limited to
legal costs and documentation preparation costs.
Fees
There will be no fees associated with closing this loan.
Proceedings
There shall be at the time of closing no action, proceeding, or investigation pending or
threatened (or any basis thereof) which might materially adversely affect the condition,
business, or prospect of the Borrower, the project, the real property, or which might
adversely affect the ability of the Borrower to perform its obligations under the loan
documentation.
Documents
Prior to closing, the Bank shall receive copies of such organizational documents of the
Borrower as the Bank may request.
Resolutions
The Bank will receive a copy of the resolutions of the Borrower authorizing the
execution, delivery, and performance of any and all documents related to the
contemplated loan transaction.
Requirements
• Operating accounts will be maintained at American Trust & Savings Bank.
Insurance
Borrower will maintain full insurance coverage on the property including business
interruption insurance and full property coverage.
Other General Conditions:
The credit facility will be subject to documentation as may be required by the Bank and
its legal counsel. The proposed credit facility will be governed by a credit agreement
between the Bank and The Dubuque Racing Association, Ltd. This agreement will
contain a number of conditions including, but not limited to:
• Annual tax returns for the Borrower within 90 days of fiscal year end.
• Annual Audited Financial Statements within 90 days of fiscal year end compared in
accordance with Generally Accepted Account Principals
Mr. Jesus Aviles
August 6, 2010
Page 4 of 4
• Monthly financial statements for the Borrower, including a balance sheet and
income statement, within 21 days of each month end.
Additional Terms
The note will be immediately due and payable upon property sale, deed or contract, or
any change in ownership.
If the loan is not funded by December 1, 2010, the rates and terms may need to be
negotiated.
Purpose of Letter
This letter shall not be deemed as evidence of a binding agreement on the part of either
the Bank or the Borrower. Important terms may remain to be negotiated. Even if
agreement in principal should be reached on the terms of financing at a subsequent date,
neither party to the financing shall be legally bound until definitive loan documents are
signed by the respective parties. This loan arrangement is subject to approval by
American Trust & Savings Bank and Dubuque Bank & Trust Company Credit
Committees.
Thank you for providing American Trust & Savings Bank and Dubuque Bank & Trust
Company with an opportunity to assist you with your financing needs. Please indicate
acceptance of this proposal no later than September 15, 2010.
Please call if you have any questions or require further clarification.
Sincerely,
Gl,
Victoria J. Ric
2 Senior Vice President
American Trust & Savings Bank
Accepted this day of , 2010.
Dubuque Racing iation
By:
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William Callahan
Executive Vice President
Dubuque Bank & Trust Company