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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 14, 1997
COLONIAL DOWNS HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
VIRGINIA 333-18295 54-1826807
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10515 Colonial Downs Parkway, New Kent, Virginia 23124
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(Address of principal executive offices)
Registrant's telephone number, including area code (804) 966-7223
(Former name of former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
Maryland Jockey Club Arbitration
Jeffrey P. Jacobs, CEO of Colonial Downs Holdings, Inc. (the
"Corporation"), announced on November 14, 1997 that Colonial Downs, L.P. plans
to seek, through arbitration, a reduction in the fees it pays to the Maryland
Jockey Club ("MJC"). Pursuant to a Management Agreement between the parties,
Colonial Downs pays MJC two percent (2%) of all amounts wagered at the
Corporation's satellite wagering facilities ("racing centers") and racetrack,
other than amounts wagered at Colonial Downs' racetrack on standardbred races
run at Colonial Downs. This fee is in consideration of MJC's agreement to apply
to the Maryland Racing Commission to cease live racing at MJC's racetracks from
mid-June to mid-October each year and for management services provided during
Colonial Downs' thoroughbred race meet. Mr. Jacobs stated that Colonial Downs
intends to demand a substantial reduction of this fee in arbitration to be filed
with the Virginia Racing Commission before the end of the year, pursuant to the
arbitration provisions of the Management Agreement. The Virginia Racing
Commission can appoint a subcommittee of its members to hear and decide such
arbitration, refer the matter to an unrelated arbitrator, or require the parties
to select an arbitrator for resolution of the dispute.
Potential Business Combinations
Mr. Jacobs also announced his interest in proposing a combination of the
Corporation with another company in which he holds a substantial interest -
Black Hawk Gaming & Development Co., Inc. ("Black Hawk"). In response to
questions from financial analysts about the Corporation's potential for future
growth, Mr. Jacobs indicated that he may propose to the boards of directors of
Black Hawk and the Corporation, after the planned opening of Black Hawk's second
casino in the spring of 1998, a merger of the companies. The Virginia Racing
Commission's consent is required for any acquisition of five percent (5%) or
more of the beneficial ownership of the Corporation's stock.
In addition to being CEO and Chairman of the Board of the Corporation,
Mr. Jacobs beneficially owns approximately 20.7% of the Corporation's
outstanding stock and exercises voting power of 46.1% as a percentage of the
Corporation's outstanding stock. (Such calculations exclude beneficially owned
options and shares subject to a convertible subordinated note which, if
included, would increase his beneficial ownership to 29.4% of the outstanding
stock and his voting power to 54.6%). Mr. Jacobs also is CEO, Co-Chairman of the
Board, and a beneficial shareholder of Black Hawk.
Additional Satellite Facilities Locations
The Corporation may consider seeking referenda in other Virginia cities
and counties in connection with spring 1998 elections for city councils and the
November 1998 Congressional elections. The Corporation is assessing possible
locations for its fifth and sixth racing centers in light of losing referenda in
Brunswick, Fredericksburg, and Roanoke. If referenda are successful, the
Corporation will seek to open additional racing centers as soon as possible, but
such additional centers may not open until 1999.
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Forward-Looking Statements
Statements regarding anticipated arbitration, possible business
combinations, referenda, the opening of additional racing centers, and certain
other statements contained in this report are forward-looking statements and, as
such, involve known and unknown risks, uncertainties, and other factors which
may cause the actual results, performance, or achievements of the Corporation to
be materially different from any future results, performance, or achievements,
expressed or implied by such forward-looking statements. Such potential risks,
uncertainties, and factors include, but are not limited to, acts by parties
outside the control of the Corporation, including the Maryland Jockey Club and
the Virginia Racing Commission, political trends, risks of construction delays,
and governmental regulation, including licensing of additional racing centers.
The forward-looking statements contained herein speak only as of the date of
this report.
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 hereto duly authorized.
COLONIAL DOWNS HOLDINGS, INC.
November 17, 1997 /s/ O. James Peterson, III
Date ----------------------------------
O. James Peterson, III, President
and Chief Operating Officer
