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HERBST:

• Financial situation began to deteriorate in 2007 with new competition, collapse of the housing bubble, smoking ban passage, and weakening economic environment

• Requested a waiver of financial covenants under its Senior Revolving Credit Facility in July 2007
– By 3Q07 route gaming EBITDA was down 46% and casino EBITDA was down 22% (y-o-y), and down 37% and 17% YTD, respectively.
– Amendment completed on 12/14/2007

• In February 2008, Herbst hires Goldman to evaluate strategic alternatives (recapitalization, refinancing, restructuring, reorganization)

• On March 11, 2009 Herbst reached an agreement with the majority of its lenders to accept its proposed pre-packaged Chapter 11 plan
– Casino and slot business split into two separate holding companies
– Herbst family will receive 90% of new plan equity in the slot route company in exchange for contribution of the new gaming device license agreement
– Conversion of the Senior Credit Facility into debt and equity of the reorganized companies, with bank lenders getting 100% of the equity in the new casino company and 10% of the new equity in the slot company
– Termination of the company's 8.125% Senior Subordinated Notes and 7% Senior Subordinated Notes and cancellation of all existing equity in the company.