LAS VEGAS, March 21 /PRNewswire-FirstCall/ -- Mandalay Resort Group (NYSE:MBG) today announced that it has closed the sale of $350 million aggregate principal amount of its floating rate convertible senior debentures due 2033. The convertible debentures will bear interest at a floating rate equal to three-month LIBOR plus .75%, payable quarterly in arrears, until March 21, 2008. After that date, the principal amount of the debentures will accrete by a variable rate, reset quarterly to three-month LIBOR plus .75%, subject to a maximum yield of 6.75% per year. The convertible debentures were offered only to qualified institutional buyers at an offering price of $1,000 per debenture with an initial base conversion price of $57.30, reflecting a conversion premium of 100% over Mandalay's closing stock price of $28.65 on March 17, 2003. Mandalay has granted the initial purchasers a 13-day option to purchase an additional $50 million of the convertible debentures. Mandalay will use the net proceeds from the sale of the convertible debentures to repay currently outstanding indebtedness under its credit facility.

Each debenture will be convertible into shares of Mandalay's common stock (I) during any calendar quarter beginning after June 30, 2003, if the closing price of Mandalay's common stock reaches a specific threshold during the preceding calendar quarter; (ii) if any of the credit ratings assigned to the convertible securities fall below specified levels; (iii) if Mandalay takes certain corporate actions; or (iv) if Mandalay calls the convertible securities for redemption. If converted, holders of the securities will receive 17.452 shares per convertible debenture, or an aggregate of 6.1 million shares of Mandalay common stock. In addition, if at the time of conversion the market price of Mandalay's common stock exceeds the base conversion price then applicable, holders will receive up to an additional 14.2789 shares of Mandalay's common stock per convertible debenture, or an additional 5.0 million shares in the aggregate, as determined pursuant to a specified formula.

Mandalay may redeem all or some of the convertible debentures for cash at any time on or after March 21, 2008, at their accredited principal amount plus accrued and unpaid interest, if any, to the redemption date . Mandalay may be required to repurchase the convertible debentures, at the option of the holders, on the fifth, tenth, fifteenth, twentieth and twenty-fifth anniversaries of their issuance, at their accredited principal amount plus accrued and unpaid interest, if any, to the purchase date. Mandalay may choose to pay the purchase price for such repurchases in cash, shares of Mandalay common stock or a combination of cash and common stock. Mandalay may also be required to repurchase the convertible debentures for cash upon a change in control occurring on or before March 21, 2008.

Neither the convertible debentures nor the shares issuable upon conversion of them have been registered under the Securities Act of 1933 or any state securities laws and, until so registered, may not be offered or sold in the United States or any state absent registration or an applicable exemption from registration requirements.

Source: Mandalay Resort Group