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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2012
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period              to             
Commission File No. 0-52734
NGA HOLDCO, LLC
(Exact name of registrant as specified in its charter) 
Nevada
 
20-8349236
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
21 Waterway Avenue, Suite 150
The Woodlands, TX 77380
(Address of principal executive offices)
Telephone: (713) 559-7400
(Registrant’s telephone number, including area code) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
¨
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
 (Do not check if a smaller ¨ reporting company)
Smaller reporting company
ý
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý



NGA HOLDCO, LLC
FORM 10-Q
INDEX
 
 


2


PART I
FINANCIAL INFORMATION
 
Item 1.
Financial Statements.
NGA HOLDCO, LLC
CONSOLIDATED BALANCE SHEETS
 
 
November 30,
2012
 
February 29,
2012
 
(Unaudited)
 
 
ASSETS
 
 
 
Current Assets:
 
 
 
Cash
$
1,330,211

 
$
734,067

Other Assets:
 
 
 
Investment in Eldorado
24,516,918

 
23,861,936

Investment in Mesquite
4,189,422

 
5,602,222

Due from the Newport Funds
5,179,772

 
5,179,772

 
$
35,216,323

 
$
35,377,997

LIABILITIES AND MEMBERS’ EQUITY
 
 
 
Liabilities:
 
 
 
Current liabilities consisting of accounts payable and accrued expenses
$
15,420

 
$

Long-term amounts due to the Newport Funds
3,186,361

 
2,918,538

 
3,201,781

 
2,918,538

Members’ Equity:
 
 
 
Class A unit (1 Unit issued and outstanding)
3,806

 
3,806

Class B units (9,999 Units issued and outstanding)
44,544,874

 
44,544,874

Accumulated deficit
(12,534,138
)
 
(12,089,221
)
 
32,014,542

 
32,459,459

 
$
35,216,323

 
$
35,377,997

See notes to consolidated financial statements.

3


NGA HOLDCO, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
November 30,
 
November 30,
 
2012
 
2011
 
2012
 
2011
Equity in net loss of unconsolidated investees
$
(1,208,985
)
 
$
(2,829,238
)
 
$
(161,561
)
 
$
(2,210,185
)
Professional fees, licensing, and other expenses
26,908

 
52,966

 
283,356

 
236,801

Net loss before income taxes
(1,235,893
)
 
(2,882,204
)
 
(444,917
)
 
(2,446,986
)
Income tax expense

 

 

 

Net loss
$
(1,235,893
)
 
$
(2,882,204
)
 
$
(444,917
)
 
$
(2,446,986
)
See notes to consolidated financial statements.

4


NGA HOLDCO, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
 
 
Nine Months Ended
 
 
November 30,
 
 
2012
 
2011
 
 
 
 
(reclassified,
Note 2)
Operating activities:
 
 
 
 
Net loss
 
$
(444,917
)
 
$
(2,446,986
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Equity in net (income) loss of Eldorado
 
(1,251,239
)
 
606,185

Equity in net loss of Mesquite
 
1,412,800

 
1,604,000

Increase (decrease) in accounts payable and accrued liabilities
 
15,420

 
(26,885
)
Net cash used in operating activities:
 
(267,936
)
 
(263,686
)
 
 
 
 
 
Investing activities:
 
 
 
 
Investment in Mesquite
 

 
(8,222,222
)
Distributions from equity investment in Eldorado
 
596,257

 
235,641

Net cash provided by (used in) investing activities:
 
596,257

 
(7,986,581
)
 
 
 
 
 
Financing activities:
 
 
 
 
Capital contributions
 

 
8,222,222

Advances received from the Newport Funds
 
267,823

 
263,763

Net cash provided by financing activities:
 
267,823

 
8,485,985

 
 
 
 
 
Net change in cash
 
596,144

 
235,718

 
 
 
 
 
Cash, beginning of period
 
734,067

 
498,322

 
 
 
 
 
Cash, end of period
 
$
1,330,211

 
$
734,040

See notes to consolidated financial statements.

5


NGA HOLDCO, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Business activities
NGA HoldCo, LLC, a Nevada limited liability company (“NGA”), was formed on January 8, 2007 at the direction of Newport Global Opportunities Fund LP, a Delaware limited partnership (“NGOF”) and an affiliate of Newport Global Advisors LP, a Delaware limited partnership (“Newport”). NGA was formed for the primary purpose of holding equity, directly or indirectly through its subsidiaries, in one or more entities related to the gaming industry. The Company has two wholly-owned subsidiaries, NGA Blocker, LLC, a Nevada limited liability company (“Blocker”), and AcquisitionCo, LLC, a Nevada limited liability company owned indirectly through Blocker (“AcquisitionCo”), each of which was formed on January 8, 2007 (collectively with NGA, the “Company”).
The Company has had no revenue generating business since inception. Its current business plan consists primarily of its holding, through AcquisitionCo, of a 17.0359% equity interest (the “Eldorado Interest”) in Eldorado Holdco LLC, a Nevada limited liability company (“Eldorado”) and a 40% equity interest (the “Mesquite Interest”) in Mesquite Gaming LLC, a Nevada limited liability company (“Mesquite”). The Eldorado Interest was effectively acquired December 14, 2007 (the “Eldorado Acquisition”), in exchange for certain first mortgage bonds and preferred equity interests (the “Eldorado-Shreveport Investments”) valued at $38,314,863. The Mesquite Interest was acquired August 1, 2011 (the “Mesquite Acquisition”), in exchange for $8,222,222 in cash, of which $7,222,222 and $1,000,000 were contributed to the Company by NGOF and Newport Global Credit Fund (“NGCF,” and collectively with NGOF, the “Newport Funds”), respectively.
Eldorado owns entities that own and operate the Eldorado Hotel & Casino located in Reno, Nevada and the Eldorado Resort Casino Shreveport located in Shreveport, Louisiana. One of the entities owned by Eldorado also owns an approximate 21% interest in a joint venture that owns and operates Tamarack Junction Casino & Restaurant, a small casino located in Reno, Nevada. In addition, an approximately 96% owned subsidiary of Eldorado owns a 50% interest in a joint venture that owns and operates the Silver Legacy Resort Casino (which is seamlessly connected to the Eldorado Hotel & Casino).
Mesquite is engaged in the casino resort industry in Mesquite, Nevada through wholly-owned subsidiaries that own and operate the CasaBlanca Resort/Golf/Spa, the Virgin River Hotel/Casino/Bingo, two championship golf courses, a full-service spa, a bowling center, a gun club, restaurants, and banquet and conference facilities. Mesquite also owns the Oasis Resort & Casino, which is currently closed.
The Company holds no equity interests other than its equity interests in Eldorado and Mesquite, along with any indirect interests it holds in other entities by virtue of its equity interests in Eldorado and Mesquite, and has no current plans to acquire any interest in another entity.
Formed in 2005, Newport is a Texas-based investment management firm focused on alternative fixed income strategies. The firm concentrates primarily on the stressed and distressed opportunities within the high yield debt and bank loan markets but may also include the acquisition and disposition of other types of corporate securities and claims. Newport has 11 employees, with its primary office in The Woodlands, TX. Newport’s principals include Timothy T. Janszen, CEO, Ryan Langdon, Senior Managing Director, and Roger A. May, Senior Managing Director. Collectively, the principals have over 35 years of experience investing in the high yield and distressed debt markets. Newport is registered with the Securities and Exchange Commission (the "Commission") as an investment adviser under the Investment Advisers Act of 1940, as amended. Newport is investment manager of the Newport Funds, private investment funds which seek attractive long-term risk adjusted returns by capitalizing on investments in the distressed debt markets and possibly control-oriented investments. The Newport Funds began investing in 2006.
Concentrations and economic uncertainties
The Company is, and expects to continue to be, economically dependent upon relatively few investments in the gaming industry. The United States recently experienced a recession accompanied by, among other things, weakness in the commercial and investment banking systems resulting in reduced credit and capital financing availability, and highly curtailed gaming, other recreational, construction and real estate market activities and general discretionary consumer spending. Although capital market activity and liquidity are reported to have improved of late, the recovery from this recessionary period is fragile and there can be no assurance that the Company’s business, which has been severely affected by the downturn, will fully recover to pre-recession levels. In addition, the Company carries cash on deposit with financial institutions substantially in excess of federally-insured limits. However, the extent of any loss that might be incurred as a result of uninsured deposits in the event of a future failure of a bank or other financial institutions, if any, is not subject to estimate at this time.

6


2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Accounting and Presentation
The interim financial statements presented herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Commission applicable to interim financial information. Certain information and disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim periods have been made (consisting of normal recurring adjustments). Results of operations for the current interim periods are not necessarily indicative of results to be expected for the full fiscal year. All significant intercompany accounts and transactions have been eliminated in consolidation. These consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Commission on June 5, 2012, from which the balance sheet information as of February 29, 2012 was derived.
Investments in Eldorado and Mesquite (Notes 4 and 5) are accounted for using the equity method of accounting. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting except as required by GAAP. Such assets are evaluated at least annually (and more frequently when circumstances warrant) to determine if events or changes in circumstances indicate that the carrying value may not be recoverable. Examples of such events or changes in circumstances that might indicate impairment might include an adverse change in the legal, regulatory or business climate relative to gaming nationally or in the jurisdictions in which the Company’s investees operate, or a significant long-term decline in historical or forecasted earnings or cash flows of an investee or the fair value of its property or business, possibly as a result of competitive or other economic or political factors. In evaluating whether a loss in value is other than temporary, the Company considers: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the investee, including any specific events which may influence the operations; (3) the Company’s intent and ability to retain its investments in the investee for a period of time sufficient to allow for any anticipated recovery in fair value; (4) the condition and trend of the economic cycle; (5) the investee’s historical and forecasted financial performance; (6) trends in the general market; and (7) the investee’s capital strength and liquidity.
In determining whether the carrying value of the Company’s investment in an investee is less than the estimated fair value of the investment, a discounted cash flow approach to value is used and is based on Level 3 inputs as defined by GAAP. The Company’s valuation model incorporates an estimated weighted-average cost of capital (effectively, a discount rate) and terminal value multiples that are used by market participants. The estimated weighted-average cost of capital is based on the risk free interest rate at the time, adjusted for specific risk factors. The Company also considers the metrics of specific business transactions that may be comparable to varying degrees. The weight assigned to these approaches to value in the Company’s impairment evaluation may vary from period to period depending upon evolving events. Forecasted prospective financial information used in the model is based on management’s expected course of action. Sensitivity analysis is performed related to key assumptions used, including possible variations in the weighted-average cost of capital and terminal value multiples, among others.
Change in accounting method
The Company's operating expenses are paid by the Newport Funds directly to vendors and investees, and certain distributions from the Company’s investees may be received directly by the Company’s members and/or their beneficial owners. Prior to January 1, 2012, these activities were treated as non-cash operating and financing transactions. Subsequently, such transactions are treated as constructive cash inflows and outflows in the statements of cash flow, which management believes is a preferable method because it more accurately reflects the Company’s operating requirements and capital resources. Under this method, net cash used by operating activities and cash provided by financing activities are each $267,823 and $263,763 higher for the nine months ended November 30, 2012 and 2011, respectively, after reclassification of 2011 amounts for comparability with the current period presentation.
Use of estimates
Timely preparation of financial statements in accordance with the rules and regulations of the Commission requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. Management estimates that the Company will eventually sell its investments in unconsolidated investees following an expected economic recovery at a price sufficient to realize the carrying value of the Company’s assets which estimates are subject to material variation over the next year.

7


3. Ownership and Management of the Company
Ownership
The Company’s one issued and outstanding Class A Unit, representing all of its voting equity, is held by NGA VoteCo, LLC, a Nevada limited liability company (“VoteCo”). All of the Company’s issued and outstanding Class B Units, representing all of its non-voting equity, are held by NGA No VoteCo, LLC, a Nevada limited liability company (“InvestCo”). At present, the Company has no plans to issue any additional Class A or Class B Units.
VoteCo is owned by Timothy T. Janszen and Ryan L. Langdon, each of whom owns a 42.85% interest, and Roger A. May, who owns a 14.3% interest. Messrs. Janszen, Langdon and May collectively are referred to as the “VoteCo Equityholders." InvestCo is owned by the Newport Funds. Newport holds for the benefit of the funds all of InvestCo’s issued and outstanding voting securities.
Management
The VoteCo Equityholders, through VoteCo, control all matters of the Company that are subject to the vote of members, including the appointment and removal of managers. Each of the VoteCo Equityholders is a member of the Company’s board of managers, and Mr. Janszen is the Company’s operating manager who has responsibility for the day-to-day management of the Company. The Class B Units issued to InvestCo allow it and its investors to invest in the Company without having any voting power or power to control the operations or affairs of the Company, except as otherwise required by law. If InvestCo and its investors had any of the power to control the operations or affairs of the Company afforded to holders of the Class A Units, they and their respective constituent equityholders would generally be required to be licensed or found suitable under the gaming laws and regulations of the States of Nevada and Louisiana.
4. Investment in Eldorado
On December 14, 2007, the Company effectively acquired its Eldorado Interest by transferring the Eldorado-Shreveport Investments in part to Eldorado Resorts, LLC (“Resorts”) and the balance to Donald L. Carano (“Carano”), free and clear of any liens. The Eldorado-Shreveport Investments included first mortgage bonds due 2012 co-issued by Eldorado Casino Shreveport Joint Venture (the “Louisiana Partnership”) and Shreveport Capital Corporation, a wholly-owned subsidiary of the Louisiana Partnership (the “Mortgage Bonds”) and 11,000 preferred shares issued by Shreveport Gaming Holdings, Inc. (“SGH”), then a partner of the Louisiana Partnership, that is not affiliated with Resorts or the Company. The original principal amount of the Mortgage Bonds was $38,045,363. Previously in May 2007, NGOF contributed the Eldorado-Shreveport Investments to the Company at the estimated fair value of such investments as of that date. Effective April 1, 2009, Resorts became a wholly-owned subsidiary of Eldorado when all of the members of Resorts, including AcquisitionCo, exchanged their interests in Resorts for identical interests in Eldorado. Of the Company’s 17.0359% Eldorado Interest, 14.47% and 2.5659% interests were acquired directly from Resorts and Carano, respectively.
As a limited liability company, Eldorado is generally not subject to federal income taxes and its members are required to include their respective shares of Eldorado’s taxable income in their respective income tax returns. Eldorado’s operating agreement provides that the board of managers will distribute each year to each member an amount equal to such member’s allocable share of taxable income multiplied by the highest marginal combined federal, state, and local income tax rate applicable to the members for that year.
We evaluated our investment in Eldorado for possible impairment as of November 30, 2012 and determined that no impairment existed.
The following table presents unaudited condensed financial information of Eldorado for the three and nine months ended September 30, 2012 and 2011 (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
Net operating revenues
$
65,907

 
$
66,975

 
$
194,771

 
$
194,360

Operating income (loss)
$
6,816

 
$
(3,867
)
 
$
20,629

 
$
8,460

Net income (loss)
$
1,973

 
$
(7,465
)
 
$
7,822

 
$
(3,574
)
Net loss attributable to non-controlling interest

 
432

 

 
493

Net income (loss) attributable to Eldorado
$
1,973

 
$
(7,033
)
 
$
7,822

 
$
(3,081
)


8


The following table presents unaudited condensed financial information of one of Eldorado’s unconsolidated investees, the Silver Legacy Joint Venture, for the three and nine months ended September 30, 2012 and 2011 (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
Net operating revenues
$
33,667

 
$
34,136

 
$
89,902

 
$
95,556

Operating income (loss)
$
4,576

 
$
2,918

 
$
(2,891
)
 
$
7,258

Net loss
$
(3,744
)
 
$
(844
)
 
$
(13,546
)
 
$
(4,026
)

In 2011, as a result of Eldorado's identification of triggering events, Eldorado fully impaired its investment in the Silver Legacy Joint Venture and discontinued the equity method of accounting. Accordingly, Eldorado has not provided for any additional losses of the investee and will not do so until its share of the future net income of the investee, if any, equals the share of net losses not recognized during the period that the equity method of accounting was suspended. During 2012, the Silver Legacy Joint Venture underwent a Chapter 11 bankruptcy reorganization which required cash advances from, and deposits by, the owners of the joint venture, but did not affect the ownership interest percentages of its owners.

5. Investment in Mesquite
Mesquite is engaged in the hotel casino industry in Mesquite, Nevada through its wholly-owned subsidiaries C & HRV, LLC (doing business as Virgin River Hotel/Casino/Bingo) and VRCC, LLC and its wholly-owned subsidiaries 5.47 RBI, LLC and RBG, LLC (doing business as CasaBlanca Resort/Golf/Spa) and its wholly-owned subsidiary CasaBlanca Resorts, LLC (doing business as Oasis Resort and Casino which is currently closed) and its wholly-owned subsidiaries Oasis Interval Ownership, LLC, Oasis Interval Management, LLC and Oasis Recreational Properties, Inc.
On August 1, 2011, the Company acquired the 40% Mesquite Interest in exchange for $8,222,222 in cash that was contributed to the Company by the Newport Funds in July 2011. The acquisition was completed upon the transfer to Mesquite of all of the assets of Black Gaming, LLC (“Black Gaming”), including Black Gaming’s direct and indirect ownership interests in its subsidiaries. The transfer of the Black Gaming assets to Mesquite and the acquisition by AcquisitionCo of the Mesquite Interest were pursuant to a joint plan of reorganization (the “Plan”) filed by Black Gaming and its subsidiaries with the United States Bankruptcy Court for the District of Nevada (the “Court”) on March 1, 2010, and approved by the Court on June 28, 2010.
The following tables present unaudited condensed financial information of Mesquite for the three and nine months ended September 30, 2012 and 2011 (in thousands):
 
 
Three Months Ended
 
One Month Ended
 
Two Months Ended
 
Three Months Ended
 
Sept. 30, 2012
 
July 31, 2011
 
Sept. 30, 2011
 
Sept. 30, 2011
 
(Successor)
 
(Predecessor)
 
(Successor)
 
(Combined)
Net operating revenues
$
20,056

 
$
7,138

 
$
13,176

 
$
20,314

Operating loss
$
(2,297
)
 
$
(988
)
 
$
(3,029
)
 
$
(4,017
)
Reorganization items
$

 
$
91,090

 
$

 
$
91,090

Net income (loss)
$
(3,795
)
 
$
89,958

 
$
(4,010
)
 
$
85,948


 
Nine Months Ended
 
Seven Months Ended
 
Two Months Ended
 
Nine Months Ended
 
Sept. 30, 2012
 
July 31, 2011
 
Sept. 30, 2011
 
Sept. 30, 2011
 
(Successor)
 
(Predecessor)
 
(Successor)
 
(Combined)
Net operating revenues
$
74,553

 
$
60,785

 
$
13,176

 
$
73,961

Operating income (loss)
$
915

 
$
3,036

 
$
(3,029
)
 
$
7

Reorganization items
$

 
$
91,090

 
$

 
$
91,090

Net income (loss)
$
(3,532
)
 
$
92,693

 
$
(4,010
)
 
$
88,683



9


6. Transactions with the Newport Funds
In 2007, NGOF received $5,118,172 of interest on the Mortgage Bonds and $61,600 of preferred dividends on behalf of (but did not remit to) the Company which are reflected in the accompanying balance sheets as due from the Newport Funds. There is no formal agreement outlining the settlement of this receivable (and the payable discussed in the following paragraph) and, accordingly, the receivable is reflected as a non-current asset.
At November 30, 2012 and February 29, 2012, the Company owed $3,186,361 and $2,918,538, respectively, to the Newport Funds for expenses paid on the Company’s behalf since inception of the Company. There have been no repayments of such amounts advanced on behalf of the Company and there is no formal agreement outlining the settlement of the receivable and payable between the Newport Funds and the Company. Accordingly, the receivable and payable are reflected as a non-current asset and a non-current liability, respectively, at November 30, 2012 and February 29, 2012.
7. Income Taxes
Blocker, a wholly-owned subsidiary of NGA, has elected to be taxed as a corporation. Accordingly, equity in the flow-through earnings of Eldorado and Mesquite is taxed to Blocker. NGA incurs certain other costs, primarily associated with being a public company, including professional and other fees, which, for tax purposes, flow through to its members. The Company has recorded a valuation allowance of 100% of its net deferred tax assets as realization of the deferred tax asset is not considered more likely than not. However, during the most recent period presented, a portion of the valuation allowance was reversed sufficient to reduce income tax expense to zero. For these reasons, the Company’s effective tax rates for the periods presented are different than the statutory federal rate of 35%.
8. Financial Instruments
Except for cash, the fair value of which equals its carrying value, the only significant financial instruments that the Company has are its investments in unconsolidated investees accounted for using the equity method (for which fair value disclosure is not required) and amounts due to and from the Newport Funds. There is no formal agreement between the Company and the Newport Funds related to the amounts due, including no stated right of offset, repayment terms, and interest rate or method. Accordingly, it is not practical to estimate the fair value of such financial instruments.

10


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the consolidated financial statements included in this Quarterly Report and in our Annual Report on Form 10-K for the year ended February 29, 2012, as filed with the U.S. Securities and Exchange Commission ("SEC").
Overview
The Company and its subsidiaries were formed as legal entities in January 2007 for the primary purpose of holding equity in one or more entities related to the gaming industry, and to exercise the rights, and manage the distributions received, in connection with those holdings. The Company’s 17.0359% interest in Eldorado and 40% interest in Mesquite were effectively acquired on December 14, 2007 and August 1, 2011, respectively.
The Company has had no revenue generating business since inception. Its only operations have consisted of equity in the net income (losses) of Eldorado and Mesquite, interest income earned on the Eldorado-Shreveport Investments, and nominal administrative expenses.
Eldorado
Eldorado, through Resorts, owns and operates the Eldorado-Reno, a premier hotel/casino and entertainment facility in Reno, Nevada, and the Eldorado-Shreveport, an all-suite art deco-style hotel and a tri-level riverboat dockside casino complex situated along the Red River in Shreveport, Louisiana. Eldorado also owns, through Resorts, a 21.25% interest in Tamarack Junction, a small casino in south Reno. Also, an approximately 96% owned subsidiary of Resorts owns a 50% interest in a joint venture that owns the Silver Legacy Resort Casino, a major, themed hotel/casino located adjacent to Eldorado-Reno.
On June 1, 2011, Resorts and Eldorado Capital Corp., a Nevada Corporation that is a wholly-owned subsidiary of Resorts, completed the issuance of $180 million of 8.625% Senior Secured Notes due June 15, 2019 (the “Resorts Senior Notes”). Also, on June 1, 2011, Resorts entered into a new $30 million senior secured credit facility available until June 30, 2014 (the “New Credit Facility”), which consists of a $15 million term loan requiring principal payments of $1.25 million each quarter beginning September 30, 2011, and a $15 million revolving credit facility. Proceeds from the issuance of the Resorts Senior Notes, together with borrowings under the New Credit Facility, were used to redeem approximately $230 million of previously outstanding debt owed by Resorts and its subsidiaries, of which approximately $31 million was held by Resorts. The remaining previously outstanding debt was called and redeemed on August 1, 2011 utilizing $9.7 million of restricted cash which was set aside on June 1, 2011 for the purpose of redeeming the notes that were called. Interest on the Senior Secured Notes is payable semiannually each June 15 and December 15 (commencing on December 15, 2011) to holders of record on the preceding June 1 or December 1, respectively. Interest for each Eurodollar Rate loan is payable on the last day of the loan, provided, however, that if the period exceeds three months the interest will be payable on the respective dates that fall every three months after the beginning of the loan period. For each Base Rate loan, interest is payable as the end of the respective quarter. The interest period cannot exceed the maturity date of the credit facility for either a Eurodollar loan or Base Rate loan.
Operational highlights for Eldorado for the three months ended September 30, 2012 included net operating revenues of approximately $65.9 million and operating expenses of approximately $59.2 million. Eldorado’s equity in net income of unconsolidated affiliates was approximately $0.2 million and interest expense was approximately $4.1 million for the period. Net income for the quarter was approximately $2 million, compared with a net loss of approximately $7 million for the corresponding quarter of 2011. The year over year quarterly increase in net income of approximately $9 million was due primarily to the absence of a $10.9 million impairment in an investment in the Silver Legacy Joint Venture recorded by Eldorado during the quarter ended September 30, 2011. This was partially offset by other activity affecting net income. For the nine months ended September 30, 2012, net operating revenues were approximately $194.8 million and operating expenses were approximately $174.5 million, while equity in net income of unconsolidated affiliates was approximately $0.5 million and interest expense was approximately $12 million for the period. The net result for the nine months ended September 30, 2012 was net income of approximately $7.8 million, compared with a net loss of approximately $3.1 million for the corresponding period of 2011.
Mesquite
Mesquite is engaged in the hotel casino industry in Mesquite, Nevada and owns and operates the Virgin River Hotel/Casino/Bingo, the CasaBlanca Resort/Golf/Spa, and the Oasis Resort and Casino. In addition to casino hotel activities, Mesquites’ operations also included vacation ownership interval sales, two golf courses, a bowling center, a gun club, and banquet and conference facilities.

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On August 1, 2011, Mesquite completed the issuance of $62.5 million of Senior Secured Notes under Mesquite’s New Loan Facility with an annual interest rate of LIBOR (1.5% floor and 4.5% ceiling) plus 700 basis points due August 1, 2016 (the “Mesquite Senior Notes”), and entered into a new $10 million senior secured credit facility which is renewable on a yearly basis with the consent of the lenders (the “Mesquite Credit Facility”). Interest and principal on the Mesquite Senior Notes and interest on the Mesquite Credit Facility are payable quarterly.
Management notes that Mesquite's results of operations tend to be seasonal in nature. During the year ended December 31, 2011, approximately 54% of Mesquite's operating income (less depreciation and amortization and other non-cash items) was generated in the first quarter and approximately 39% was generated in the second quarter, with the remainder being generated during the second half of the year. As such, Mesquite's results of operations for the first nine months of the year should not be extrapolated to arrive at anticipated full year results. Operational highlights for Mesquite for the three months ended September 30, 2012 included net revenues of approximately $20 million, operating expenses of approximately $22.4 million, and interest expense of approximately $1.5 million. The net loss for the quarter ended September 30, 2012 was approximately $3.8 million, compared with net income of approximately $85.9 million for the corresponding period of 2011. The year over year quarterly decrease in net income of approximately $89.7 million was due primarily to the absence of a gain associated with reorganizational items of approximately $91.9 million during the quarter ended September 30, 2011. This was partially offset by an decrease of approximately $2 million in operating expenses during the quarter when compared to the quarter ended September 30, 2011. Mesquite's management believes that several additional factors including general economic weakness in Nevada and neighboring states and continued higher gasoline prices contributed to the loss during the third quarter. For the nine months ended September 30, 2012, net revenues were approximately $74.6 million and operating expenses were approximately $73.6 million, while interest expense was approximately $4.4 million for the period. The net result for the nine months ended September 30, 2012 was a net loss of approximately $3.5 million, compared with net income of approximately $92.7 million for the corresponding period of 2011.
Results of Operations, Three Months Ended November 30, 2012 Compared to the Three Months Ended November 30, 2011
For the three months ended November 30, 2012, the Company’s equity in the net loss of its unconsolidated investees was approximately $1.2 million, compared to a net loss of approximately $2.8 million for the corresponding period of 2011. The decreased loss was largely attributable to a $1.5 million increase in the Company's equity in the net income of Eldorado. This increase was due primarily to the absence of a $10.9 million impairment in the Silver Legacy Joint Venture recorded by Eldorado during the quarter ended September 30, 2011. The Company's equity in the net loss of Mesquite increased by $0.1 million during the quarter ended September 30, 2012 when compared to the corresponding period of 2011. Professional, licensing, and other expenses incurred by the Company during the quarter decreased approximately $26,000 when compared to the same period in 2011, due primarily to a changing of the Company's fiscal year-end and changes in the Company's Security and Exchange Commission ("SEC") reporting process.
Results of Operations, Nine Months Ended November 30, 2012 Compared to the Nine Months Ended November 30, 2011
For the nine months ended November 30, 2012, the Company’s equity in the net loss of its unconsolidated investees was approximately $0.2 million compared to a net loss of approximately $2.2 million for the corresponding period of 2011. The Company’s equity in the net income of Eldorado increased by approximately $1.9 million, due primarily to the absence of a $10.9 million impairment in an investment in the Silver Legacy Joint Venture recorded by Eldorado during the quarter ended September 30, 2011. In addition, the increase in equity in net income was positively affected by Eldorado's discontinuation during the fourth quarter of 2011 of the equity method of accounting for (and not providing for additional losses of) the Silver Legacy Joint Venture until Eldorado's share of future net income, if any, equals the share of net losses not recognized during the period that the equity method of accounting was suspended. The Company’s equity in the net loss of Mesquite increased by $0.1 million during the nine months ended September 30, 2012 when compared to the corresponding period of 2011. Professional, licensing, and other expenses incurred by the Company during the nine months ended November 30, 2012 increased approximately $47,000 when compared to the same period in 2011, due primarily to a changing of the Company's fiscal year-end and changes in the Company's Security and Exchange Commission ("SEC") reporting process.
Liquidity and Capital Resources
The Company expects to incur during the remainder of fiscal year 2012 approximately $0.1 million in costs associated with the Company’s ownership of its interests in Eldorado and Mesquite. These costs are expected to be funded by the Newport Funds. The Company has no current plans to make any additional investments. Thus, the Company has the resources to fund its operations and commitments during the remainder of fiscal year 2012.

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Critical Accounting Estimates and Policies
A description of our critical accounting policies can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2011. Except as described in Note 2 to the financial statements included herein, there have been no material changes to those policies during the eleven months ended November 30, 2012 other than the reclassification explained in Note 2 to the Consolidated Financial Statements included in this quarterly report.
Recently Issued Accounting Standards
No recently issued accounting pronouncements not yet adopted are expected to have a material impact on our future financial position, results of operations, or cash flows.
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
 
Item 4.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), an evaluation was performed by management, with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective as of November 30, 2012.
Changes in Internal Control Over Financial Reporting
As required by Rule 13a-15(d) under the Exchange Act, our management, including our principal executive officer and principal financial officer, has evaluated our internal control over financial reporting. Based on that evaluation, there have been no changes in our internal control over financial reporting during the three month period ended November 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
OTHER INFORMATION

Item 1.
Legal Proceedings.
None.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
None.
 
Item 3.
Defaults Upon Senior Securities.
None.
 
Item 4.
Mine Safety Disclosures.
Not applicable.
 

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Item 5.
Other Information.
None.
 


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Item 6.
Exhibits.
The list of exhibits set forth in the accompanying Exhibit Index is incorporated by reference into this Item 6.
SIGNATURES
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, thereunto duly authorized.
 
 
 
 
 
 
 
 
NGA HOLDCO, LLC
 
 
 
Date: January 14, 2013
 
By:
 
/S/    TIMOTHY T. JANSZEN        
 
 
 
 
Timothy T. Janszen
Operating Manager
(Principal Executive Officer)
 
 
 
Date: January 14, 2013
 
By:
 
/S/    ROGER A. MAY        
 
 
 
 
Roger A. May
Manager
(Principal Financial Officer)
EXHIBIT INDEX
 
 
 
 
Exhibit
No.
  
Description
 
 
31.1

  
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
31.2

  
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
32.1

  
Certification of Principal Executive Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
32.2

  
Certification of Principal Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
101

  
The following financial statements from NGA Holdco, LLC's Quarterly Report on Form 10-Q for the three and nine months ended November 30, 2012, filed with the Securities and Exchange Commission on January 14, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets at November 30, 2012 and February 29, 2012; (ii) the Consolidated Statements of Operations for the three and nine months ended November 30, 2012 and 2011; (iii) the Consolidated Statements of Cash Flows for the nine months ended November 30, 2012 and 2011; and (iv) the Notes to Consolidated Financial Statements.

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