EL CONQUISTADOR PARTNERSHIP LP, S-11/A, 1998-12-31

EL CONQUISTADOR PARTNERSHIP LP
S-11/A, 1998-12-31
REAL ESTATE

Previous: FT 313, S-6/A, 1998-12-31

Next: HOST MARRIOTT CORP/, 8-K, 1998-12-31

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1998

REGISTRATION NO. 333-65889

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

EL CONQUISTADOR PARTNERSHIP L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENTS)

------------------------

EL CONQUISTADOR RESORT & COUNTRY CLUB
1000 EL CONQUISTADOR AVENUE
FAJARDO, PUERTO RICO 00738
(787) 863-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

NOEL VERA-RAMIREZ
WYNDHAM RESORTS
6063 EAST ISLA VERDE AVENUE
CAROLINA, PUERTO RICO 00979
(787) 791-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

------------------------

COPIES TO:

<TABLE>
<S> <C> <C> <C>
JAIME E. SANTOS, ESQ. JULIO L. AGUIRRE, ESQ. PAMELA E. FLAHERTY, ESQ. SAMUEL T. CESPEDES, JR., ESQ.
PIETRANTONI MENDEZ & ALVAREZ FIDDLER GONZALEZ & RODRIGUEZ, LLP SHACK & SIEGEL, P.C. MCCONNELL VALDES
BANCO POPULAR CENTER, SUITE 1901 254 MUNOZ RIVERA AVENUE 530 FIFTH AVENUE 270 MUNOZ RIVERA AVENUE
SAN JUAN, PUERTO RICO 00918 SAN JUAN, PUERTO RICO 00918 NEW YORK, NEW YORK 10036 SAN JUAN, PUERTO RICO 00918
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
AMOUNT BEING OFFERING PRICE OFFERING REGISTRATION
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
Undivided interests in the Loan Agreement between Puerto
Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority
('AFICA') and Registrant relating to certain AFICA
tourism revenue bonds.................................. $104,000,000 $5,000 $104,000,000 $ 30,612
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) $29,500 of the registration fee was paid with the initial filing on October
20, 1998 at the rates then in effect. $1,112 of the registration fee has
been paid together with this filing of Amendment No. 1 to the Registration
Statement at the rates presently in effect.

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
CAPTION IN OFFICIAL STATEMENT AND
ITEM AND CAPTION IN FORM S-11 PROSPECTUS
--------------------------------------------------------------- ------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside Front Cover
Page of Prospectus........................................... Front Cover Page of Registration Statement
and Outside Front Cover Page of Official
Statement and Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus........ Inside Front Cover Page of Official
Statement and Prospectus and Outside
Back Cover Page of Official Statement
and Prospectus
3. Summary Information, Risk Factors and Ratio of Earnings to
Fixed Charges................................................ Summary, Risk Factors and Selected
Financial Data
4. Determination of Offering Price................................ Not applicable
5. Dilution....................................................... Not applicable
6. Selling Security Holders....................................... Not applicable
7. Plan of Distribution........................................... Underwriting
8. Use of Proceeds................................................ Use of Proceeds
9. Selected Financial Data........................................ Selected Financial Data
10. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ Management's Discussion and Analysis of
Financial Condition and Results of
Operations
11. General Information as to Registrant........................... The Resort and El Conquistador Partnership
L.P.
12. Policy with Respect to Certain Activities...................... The Resort, El Conquistador Partnership
L.P. and Policy with Respect to Certain
Activities
13. Investment Policies of Registrant.............................. Investment Objectives and Policies
14. Description of Real Estate..................................... The Resort
15. Operating Data................................................. The Resort
16. Tax Treatment of Registrant and its Security Holders........... The Bonds and Tax Consequences
17. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters.............................. Not applicable
18. Description of Registrant's Securities......................... The Bonds
19. Legal Proceedings.............................................. Legal Proceedings
20. Security Ownership of Certain Beneficial Owners and
Management................................................... Security Ownership of Certain Beneficial
Owners and Management
21. Directors and Executive Officers............................... Management of El Conquistador Partnership
L.P.
22. Executive Compensation......................................... Management of El Conquistador Partnership
L.P.
23. Certain Relationships and Related Transactions................. Certain Relationships and Related
Transactions and El Conquistador
Partnership L.P.
24. Selection, Management and Custody of Registrant's
Investments.................................................. The Resort and El Conquistador Partnership
L.P.
25. Policies with Respect to Certain Transactions.................. The Partnership and Policies with Respect
to Certain Transactions
26. Limitations of Liability....................................... El Conquistador Partnership L.P.
27. Financial Statements and Information........................... Financial Statements
28. Interests of Named Experts and Counsel......................... Not applicable
</TABLE>

<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-11 CAPTION IN OFFICIAL STATEMENT AND PROSPECTUS
--------------------------------------------------------------- --------------------------------------------
<S> <C> <C>
29. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... Management of El Conquistador Partnership
L.P. and Underwriting
30. Quantitative and Qualitative Disclosures about Market Risk..... Not applicable
</TABLE>

THE INFORMATION IN THIS OFFICIAL STATEMENT AND PROSPECTUS IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
OFFICIAL STATEMENT AND PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR
JURISDICTION WHERE THE OFFER IS NOT PERMITTED.

PRELIMINARY OFFICIAL STATEMENT AND PROSPECTUS DATED DECEMBER 31, 1998
SUBJECT TO COMPLETION AND AMENDMENT

$104,000,000
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ('AFICA') TOURISM REVENUE BONDS,
1999 SERIES A (EL CONQUISTADOR RESORT PROJECT)

- --------------------------------------------------------------------------------

TERMS OF SALE

The final pricing of the bonds is shown on the inside cover page of this
official statement and prospectus. We will receive $ of the proceeds from
the sale of the bonds, after paying the underwriting fees and commissions of
$ . The bonds:

Earn interest at fixed rates ranging from % to %, depending on
their maturity date

Come due on varying dates as set forth on the inside cover page

Are rated 'Baa2' by Moody's Investors Service, Inc.

Earn interest payable monthly on the first day of each month, commencing
, 1999

Are subject to mandatory and optional redemption

Will be secured by a lien on substantially all of our assets

Will be issued in denominations which are multiples of $5,000

TAX RAMIFICATIONS OF THE BONDS AND THE INTEREST ON THE BONDS

Provided we comply with the source of income covenants in the loan
agreement with AFICA, it is the opinion of Fiddler Gonzalez & Rodriguez, LLP,
bond counsel, that the bonds and the interest on the bonds are exempt from or
not subject to:

(1) Puerto Rico income taxes and municipal property and license taxes,

(2) under certain circumstances, Puerto Rico gift and estate taxes, and

(3) United States income tax when received by:

(a) individuals who are bona fide residents of Puerto Rico during the
entire taxable year in which such interest is received, or

(b) foreign corporations, including Puerto Rico corporations, and such
interest is not effectively connected with the conduct of trade or
business in the United States.

CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 11 IN THIS OFFICIAL
STATEMENT AND PROSPECTUS, INCLUDING:

<TABLE>
<S> <C>
Debt service obligations of El Conquistador Dependence on operator of the Resort
Lack of Asset Diversification Hotel Industry Risks
of El Conquistador
Relationships with Patriot and Wyndham
</TABLE>

- --------------------------------------------------------------------------------

WE AND AFICA DO NOT INTEND TO APPLY FOR LISTING OF THE BONDS ON A
SECURITIES EXCHANGE. THERE WILL LIKELY BE NO SECONDARY MARKET FOR THE BONDS.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION, INCLUDING THE
COMMISSIONER OF FINANCIAL INSTITUTIONS OF PUERTO RICO, HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
OFFICIAL STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

CITICORP FINANCIAL SERVICES CORPORATION

, 1999

$104,000,000
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND
ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY
TOURISM REVENUE BONDS, 1999 SERIES A
(EL CONQUISTADOR RESORT PROJECT)

$ Serial Bonds Issued as Follows:

<TABLE>
<CAPTION>
PRINCIPAL INTEREST
AMOUNT RATE MATURITY DATE PRICE
- ---------- -------- --------------------------------- -----

$ Term Bonds, Issued as Follows:

<TABLE>
<CAPTION>
PRINCIPAL INTEREST
AMOUNT RATE MATURITY DATE PRICE
- ---------- -------- --------------------------------- -----
<S> <C> <C> <C>
$ % Term Bonds Due , 2014 100.0%
$ % Term Bonds Due , 2019 100.0%
$ % Term Bonds Due , 2024 100.0%
$ % Term Bonds Due , 2029 100.0%
</TABLE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY....................................... 1
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS................................... 1
SUMMARY........................................ 2
The Bonds................................. 2
Risk Factors.............................. 3
Tax Consequences.......................... 4
Rating.................................... 4
Underwriter............................... 4
The Resort................................ 4
Management and Marketing of the Resort.... 5
El Conquistador Partnership L.P. ......... 5
Ownership Structure....................... 6
Continuing Disclosure..................... 8
Effect of Hurricane Georges............... 8
Summary Financial Information............. 9
RISK FACTORS................................... 11
Risks Associated with Payment of the
Bonds................................... 11
Hotel Industry Risks...................... 12
Events Not Within the Control of El
Conquistador............................ 13
Real Estate Investment Risks Related to
the Resort.............................. 14
Financial Difficulties of Patriot and
Wyndham................................. 15
Dependence on the Hotel Operator.......... 16
Potential Conflicts of Interest Between
the Partnership and the Hotel
Operator................................ 17
Risks of Operating a Hotel under a Brand
Affiliation............................. 17
Tourism Tax Exemptions Applicable to El
Conquistador............................ 17
Gaming Regulations Associated with the
Resort's Casino......................... 18
Dependence on Key Personnel............... 18
Competition Within the Hotel and Casino
Business................................ 18
El Conquistador's Reliance on Single
Market.................................. 18
Relationship Between Citicorp Financial
Services and Citicorp Real Estate....... 19
Absence of Secondary Market for the Bonds;
Rating Maintenance for the Bonds........ 19
USE OF PROCEEDS................................ 20
THE RESORT..................................... 21
General................................... 21
Access.................................... 22
Casino Credit Policy...................... 23

<CAPTION>
PAGE
----
<S> <C>
Government Regulation and Licensing....... 23
Seasonality............................... 23
Competition............................... 24
Employees................................. 24
Property.................................. 24
Management and Marketing of the Resort.... 25
Golden Door'r' Spa........................ 28
Las Casitas Village Arrangements.......... 28
Further Development of Las Casitas
Village................................. 28
Available Information..................... 28
EL CONQUISTADOR PARTNERSHIP L.P................ 29
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS............................ 31
MANAGEMENT OF EL CONQUISTADOR PARTNERSHIP
L.P.......................................... 34
Executive Officers of El Conquistador..... 34
Officers and Directors of the Managing
General Partner......................... 36
Compensation of Executive Officers of El
Conquistador............................ 36
Limitations on the Liability of Affiliated
Persons................................. 36
SELECTED FINANCIAL DATA........................ 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................... 40
General................................... 40
Results of Operations..................... 40
Financial Condition....................... 43
Taxes..................................... 45
Inflation................................. 45
Seasonality............................... 46
Recent Developments....................... 46
Year 2000 Compliance...................... 47
LEGAL PROCEEDINGS.............................. 49
POLICY WITH RESPECT TO CERTAIN ACTIVITIES...... 50
INVESTMENT OBJECTIVES AND POLICIES............. 51
POLICIES WITH RESPECT TO CERTAIN
TRANSACTIONS................................. 51
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................. 51
THE BONDS...................................... 53
General................................... 53
Trustee................................... 53
Book-Entry Only System.................... 53
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Redemption................................ 55
Sources of Payment and Security for the
Bonds................................... 58
SUMMARY OF THE LOAN AGREEMENT.................. 60
Bond Proceeds............................. 60
Maintenance and Operation of the Resort... 60
Disposition of Project; Assignment of Loan
Agreement; Merger or Consolidation of El
Conquistador............................ 60
Maintenance of Source of Income;
Additional Interest Upon Event of
Taxability.............................. 61
Covenants................................. 62
Events of Default and Remedies............ 63
Limitation on Partner's Liability......... 64
Amendments and Supplements to the Loan
Agreement and the Related Documents..... 64
SUMMARY OF THE TRUST AGREEMENT................. 65
Project Fund.............................. 65
Bond Fund................................. 65
Reserve Fund.............................. 65
Renewal and Replacement Fund.............. 66
Investment of Funds....................... 66
Events of Default......................... 67
<CAPTION>
PAGE
----
<S> <C>
Acceleration of Maturities................ 68
Enforcement of Remedies................... 68
Amendments and Supplements to the Trust
Agreement............................... 69
Defeasance................................ 69
AFICA.......................................... 70
General................................... 70
Governing Board........................... 70
Outstanding Revenue Bonds and Notes of
AFICA................................... 71
GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO.... 71
TAX CONSEQUENCES............................... 72
RATING......................................... 73
LEGAL INVESTMENT............................... 73
UNDERWRITING................................... 73
LEGAL MATTERS.................................. 74
CONTINUING DISCLOSURE COVENANT................. 74
REPORTS OF EL CONQUISTADOR PARTNERSHIP L.P..... 76
EXPERTS........................................ 76
MISCELLANEOUS.................................. 77
INDEX TO FINANCIAL STATEMENTS.................. F-1
FORM OF OPINION OF BOND COUNSEL................ A-1
</TABLE>

GLOSSARY

AFICA means the Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority, a governmental
instrumentality of Puerto Rico.

An Event of Taxability will occur when AFICA and the trustee with respect
to the bonds receive an accountants' report stating that El Conquistador failed
to comply with the source of income covenants under the loan agreement and as a
result of such failure interest on the bonds is taxable to you.

Hotel Operator means collectively, Williams Hospitality, Wyndham Management
Corporation and Grand Bay Management Company.

Patriot/Wyndham means collectively, Patriot American Hospitality, Inc. and
Wyndham International, Inc.

Qualifying Bondholder means a beneficial owner of the bonds that is (1) an
individual who during the entire taxable year in which he receives or accrues
interest on the bonds that due to the occurrence of an Event of Taxability is
not income from within Puerto Rico under the U.S. Internal Revenue Code of 1986,
as amended, was a bona fide resident of Puerto Rico or (2) a Puerto Rico
corporation or other foreign corporation (for purposes of the Internal Revenue
Code) that is not engaged in trade or business in the United States.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

THIS OFFICIAL STATEMENT AND PROSPECTUS INCLUDES CERTAIN 'FORWARD-LOOKING
STATEMENTS.' ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED
IN THIS OFFICIAL STATEMENT AND PROSPECTUS, INCLUDING, WITHOUT LIMITATION,
STATEMENTS REGARDING EL CONQUISTADOR'S FUTURE FINANCIAL POSITION, BUSINESS
STRATEGY, BUDGETS, PROJECTED COSTS AND PLANS AND OBJECTIVES FOR FUTURE
OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, FORWARD-LOOKING
STATEMENTS GENERALLY CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY
SUCH AS 'MAY,' 'WILL,' 'EXPECT,' 'INTEND,' 'ESTIMATE,' 'ANTICIPATE,' 'BELIEVE,'
OR 'CONTINUE' OR THE NEGATIVE THEREOF OR VARIATIONS THEREON OR SIMILAR
TERMINOLOGY. ALTHOUGH EL CONQUISTADOR BELIEVES THAT THE EXPECTATIONS REFLECTED
IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. EL CONQUISTADOR'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING
STATEMENTS. CERTAIN FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE:

COMPETITION FOR GUESTS FROM OTHER HOTELS;

DEPENDENCE UPON GROUP AND LEISURE TRAVELERS AND TOURISM;

ADVERSE WEATHER CONDITIONS AND OCCURRENCES; AND

THE SEASONALITY OF THE HOTEL INDUSTRY.

IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM EL
CONQUISTADOR'S EXPECTATIONS ARE DISCLOSED UNDER 'RISK FACTORS' AND ELSEWHERE IN
THIS OFFERING STATEMENT AND PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN
CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS OFFICIAL
STATEMENT AND PROSPECTUS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO EL CONQUISTADOR, OR PERSONS ACTING ON ITS BEHALF, ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE VARIOUS FACTORS SET FORTH IN THIS
OFFICIAL STATEMENT AND PROSPECTUS.

SUMMARY

This Summary highlights selected information from this official statement
and prospectus. It may not contain all of the information that is important to
you. To understand the terms of the bonds, you should carefully read this
official statement and prospectus, including the financial statements and the
notes to the financial statements of El Conquistador Partnership L.P. No person
is authorized to detach this Summary from this official statement and prospectus
or otherwise to use it without the entire official statement and prospectus.

El Conquistador changed its fiscal year-end to December 31 from March 31
effective for the fiscal year ended December 31, 1997. El Conquistador has
provided information for the 12-month period ended March 31, 1998 throughout
this official statement and prospectus. El Conquistador believes that
information for the 12-month period ended March 31 is a more accurate reflection
of its results of operations and makes the information more easily compared to
prior years. This belief is based on the fact that the El Conquistador's
business is seasonal with the high season occurring primarily in the fiscal
quarter ended March 31.

THE BONDS

Title of Security. $104,000,000 Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority
Tourism Revenue Bonds, 1999 Series A (El Conquistador Resort Project).

The Issuer. AFICA.

Use of Proceeds. AFICA will issue the bonds and lend the proceeds to El
Conquistador pursuant to a loan agreement. El Conquistador will use the loan
proceeds to repay Citicorp Real Estate, Inc. a $90,000,000 interim loan and
related interest, to fund certain reserves and to pay certain costs and expenses
of issuing the bonds. The proceeds of the interim loan were used to repay The
Bank of Tokyo-Mitsubishi, Ltd. for advances made by it to redeem outstanding
bonds issued by AFICA in 1991. The 1991 bonds were issued to finance the
development and construction of the El Conquistador Resort & Country Club.

Sources of Payment. Pursuant to the loan agreement, El Conquistador will be
obligated to pay principal and interest on the bonds. El Conquistador will make
such payments from cash it generates from operating activities.

Interest on the Bonds. Interest on the bonds will be paid to you monthly on
the first day of each month, commencing on , 1999. Additionally,
interest will be paid to you at maturity or redemption. Interest will be
computed using a 360-day year of twelve 30-day months.

Details of the Bonds. The bonds will be issued in the total principal
amount of $104,000,000. $ of the bonds will be serial bonds maturing at
six-month intervals commencing 1999 as set forth on the inside front
cover page of this official statement and prospectus. $ of the bonds will be
term bonds maturing at five-year intervals commencing 2009 as set
forth on the inside front cover page of this official statement and prospectus.

The bonds will be issued pursuant to a trust agreement between AFICA and
Banco Santander Puerto Rico, as trustee. The bonds will be issued in registered
form, without coupons, in denominations which are multiples of $5,000. The bonds
will be registered under The Depository Trust Company Book-Entry Only System.
This means that you will not receive a certificate for any bonds you purchase.
Your ownership interest in the bonds will be recorded in the Book-Entry Only
System.

Security for the Bonds. The bonds will be secured by a lien on
substantially all the assets of El Conquistador.

Mandatory Redemption of Bonds. Some or all of the bonds may be required to
be redeemed if all or a portion of the Resort is condemned or damaged. Some or
all of the bonds are required

to be redeemed if the Resort stops operating or if there is a second occurrence
of an Event of Taxability.

In addition, the term bonds are periodically subject to mandatory
redemption in part. For a schedule of term bond redemptions, see 'THE
BONDS -- Redemption -- Mandatory Redemption Other than Upon Event of
Taxability.'

Optional Redemption of Bonds. El Conquistador has the right to redeem all
or part of the bonds, on and after , 2009. The redemption prices
are set forth below. The redemption prices are expressed as a percentage of the
outstanding principal amount of such bonds, and do not include interest.

<TABLE>
<CAPTION>
REDEMPTION
REDEMPTION PERIOD PRICE
- --------------------------------------------------------------------------------- ----------
<S> <C>
, 2009 - , 2010.................................... 102.0%
, 2010 - , 2011.................................... 101.0%
, 2011 and thereafter............................................. 100.0%
</TABLE>

Bonds are Limited Obligations of AFICA. The bonds do not constitute an
indebtedness of the government of Puerto Rico or any of its political
subdivisions. Neither the government of Puerto Rico nor any of its subdivisions
will be liable for payment of the bonds, except that AFICA is required to pay
the bonds solely out of payments made by El Conquistador under the loan
agreement. AFICA is the issuer of the bonds and acts as a pass-through entity so
that the interest on the bonds will generally be tax free to Puerto Rico
residents.

RISK FACTORS

The bonds are subject to certain risks that could affect the ability of El
Conquistador to pay the principal of and interest on the bonds. You should
review the section entitled 'RISK FACTORS' for a discussion of certain risks
associated with an investment in the bonds. Some of these risks are:

The ability of El Conquistador to meet its debt service obligations is
dependent on the future performance of the Resort.

El Conquistador is not diversified: it has a single asset -- the Resort,
in a single location -- Puerto Rico, and operates in a single
industry -- the resort hotel industry.

The operations and revenues of the Resort are affected by a number of
factors that are outside of the control of El Conquistador, including
competition, seasonality of the hotel industry, potential overbuilding in
the industry, general economic conditions, weather conditions, droughts
and water shortages, hurricanes and other natural disasters, and the cost
and availability of labor, insurance and utilities.

Properties like the Resort are relatively difficult to sell, which may
affect the ability of bondholders to foreclose on and sell El
Conquistador's property in the event such actions were necessary to pay
the bonds.

There will likely be no secondary market for the bonds.

Each of Williams Hospitality, Wyndham Management and Grand Bay is an
affiliate of El Conquistador. Williams Hospitality and Wyndham Management
also operate other hotel and resort properties in Puerto Rico and the
Caribbean and, therefore, there is a potential for conflicts of interest
to arise.

TAX CONSEQUENCES

Provided El Conquistador complies with the source of income covenants in
the loan agreement, it is the opinion of Fiddler Gonzalez & Rodriguez, LLP, bond
counsel, that the bonds and the interest on the bonds are exempt from or not
subject to:

(1) Puerto Rico income taxes and municipal property and license taxes,

(2) under certain circumstances, Puerto Rico gift and estate taxes,
and

(3) United States income tax when received by:

(a) individuals who are bona fide residents of Puerto Rico during
the entire taxable year in which such interest is received, or

(b) foreign corporations, including Puerto Rico corporations, and
such interest is not effectively connected with the conduct of
trade or business in the United States.

If you are a person or entity described in (3)(a) or (b) above and you have
to pay United States income tax on the interest paid on the bonds because El
Conquistador fails to comply with source of income provisions of the loan
agreement, El Conquistador will be required to pay an additional amount to you.
The additional amount plus the actual interest paid to you on the bonds will not
exceed 12% of the outstanding principal amount of the bonds which you own during
any taxable year of El Conquistador. The additional amount that El Conquistador
may be required to pay to you if the interest on the bonds becomes taxable in
the United States may not be enough for you to have as much income after payment
of taxes as you would have had if the interest remained tax free.

RATING

The Bonds will be rated 'Baa2' by Moody's Investors Service, Inc. There is
no assurance that such rating will remain in effect for any given period of time
or that it will not be revised downward or withdrawn entirely by Moody's if, in
its sole judgment, circumstances so warrant.

UNDERWRITER

The underwriters of the bonds are Citicorp Financial Services Corporation.
The underwriters have agreed to purchase the bonds at an aggregate discount of
$ from the initial offering price of the bonds shown (or derived from
information shown) on the inside front cover page of this official statement and
prospectus.

THE RESORT

The Resort is a world class destination resort complex. The Resort consists
of 751 guest rooms, an 18-hole championship golf course, a marina, seven tennis
courts, 90,000 square feet of convention and meeting facilities, six lounges and
nightclubs, 12 restaurants, a 10,000 square foot casino, 25 retail shops, a
fitness center and five pool areas, situated on a bluff overlooking the
convergence of the Atlantic Ocean and the Caribbean Sea in Fajardo, Puerto Rico.
The Resort also features a secluded beach located on a private island three
miles offshore known as Palominos Island.

The Resort also generally has available 90 condominium units known as Las
Casitas Village, which provides up to another 167 rooms to the inventory of
luxury rooms available to the Resort. Las Casitas Village condominium units are
owned by third parties substantially all of who make the units available to the
Resort through individual rental agreements.

The Resort's (excluding Las Casitas Village) average occupancy and average
room rate for certain periods were as follows:

<TABLE>
<CAPTION>
AVERAGE
AVERAGE ROOM
PERIOD OCCUPANCY RATE
- ----------------------------------------------------------------------- --------- -------
<S> <C> <C>
12-months ended 3/31/98................................................ 72.7% $207.56
12-months ended 3/31/97................................................ 72.0% $202.86
12 months ended 3/31/96................................................ 71.0% $198.99

9-months ended 9/30/98................................................. 74.5% $213.93
9-months ended 9/30/97................................................. 76.4% $202.16
</TABLE>

MANAGEMENT AND MARKETING OF THE RESORT

The Resort has historically been managed by Williams Hospitality Group
Inc., an affiliate of El Conquistador. As of January 16, 1998, Wyndham
International, Inc., the owner of the Wyndham Resorts'r' and Grand Bay'r'
brands, acquired the majority interest in Williams Hospitality and in March 1998
acquired the remaining interests. Prior to consummation of this offering, El
Conquistador will enter into an amended and restated management agreement with
Williams Hospitality. Prior to consummation of this offering, Williams
Hospitality will enter into an agreement with Wyndham Management Corporation
with respect to the management of the Resort. Williams Hospitality will also
enter into a marketing agreement with Wyndham Management with respect to the
marketing of the Resort (excluding Las Casitas Village) as a Wyndham Resort'r'.
Additionally, Williams Hospitality will enter into a marketing agreement with
Grand Bay Management Company providing for the marketing of Las Casitas Village
as a Grand Bay'r' hotel and the use of the Grand Bay reservation system for Las
Casitas Village.

EL CONQUISTADOR PARTNERSHIP L.P.

The Resort, excluding Las Casitas Village, is owned by El Conquistador. El
Conquistador owns no assets other than its interest in the Resort. El
Conquistador's sole business is the ownership and management of the Resort.

El Conquistador is a Delaware limited partnership organized on January 16,
1990 under the Delaware Revised Uniform Limited Partnership Act. El
Conquistador's mailing address in Puerto Rico is 1000 El Conquistador Avenue,
Fajardo, Puerto Rico 00738. El Conquistador's telephone number at this location
is (787) 863-1000. The Managing General Partner of El Conquistador is
Conquistador Holding, Inc.

El Conquistador is beneficially owned approximately 77% by Patriot American
Hospitality, Inc. and approximately 23% by Wyndham International. The shares of
common stock of Patriot and Wyndham International are traded together as 'paired
shares' on the New York Stock Exchange. Patriot is a real estate investment
trust specializing in the ownership of hotels. Wyndham International owns and
operates hotels under several brand names including Wyndham Resorts'r' and Grand
Bay'r'.

OWNERSHIP STRUCTURE

As of the date of this official statement and prospectus, the ownership
structure of El Conquistador, Williams Hospitality and Wyndham Management is
as follows:

[CHART BREAKDOWN BY PERCENTAGE OF OWNERSHIP]

Immediately prior to this offering, the name of El Conquistador will be
changed to El Conquistador Partnership L.P., S.E. and the ownership structure of
El Conquistador will be changed and will be as follows:

[CHART BREAKDOWN BY PERCENTAGE OF OWNERSHIP]

El Conquistador has no current relationship with AFICA. In 1991, El
Conquistador raised $120,000,000 through an AFICA financing the proceeds of
which were used for the purchase and development of the Resort. The 1991 AFICA
financing was repaid in August 1998.

CONTINUING DISCLOSURE

El Conquistador will enter into an undertaking for the benefit of the
bondholders and the beneficial owners of the bonds to file financial information
and operating data, including audited financial statements, on an annual basis.
El Conquistador will also provide notice of certain events, including defaults,
draws on reserves, bond calls and rating changes. Such filings and notices will
be provided to nationally recognized municipal securities information
repositories and any Puerto Rico state information depository. Such filings will
be made pursuant to Rule 15c2-12 promulgated by the SEC under the Securities
Exchange Act of 1934.

EFFECT OF HURRICANE GEORGES

Hurricane Georges passed through Puerto Rico on September 21 and 22, 1998.
The Hurricane caused approximately $36,000,000 of property related damage to the
Resort (excluding Las Casitas Village). As a result of the damage, the Resort
was closed from September 21, 1998 until October 3, 1998. Substantially all of
the physical damage and business interruption suffered by El Conquistador at the
Resort is covered by insurance.

SUMMARY FINANCIAL INFORMATION

The following table sets forth selected income data and balance sheet data
of El Conquistador. The selected income data and balance sheet data are derived
from the financial statements of El Conquistador for the fiscal year (9 months)
ended December 31, 1997 and the fiscal years ended March 31, 1994, 1995, 1996
and 1997, which have been audited by Ernst & Young LLP, independent auditors.
The financial statements and notes thereto as of December 31, 1997 and March 31,
1997 and for each of the three fiscal years ended December 31, 1997 are included
in this official statement and prospectus, and include an explanatory paragraph
which describes an uncertainty about El Conquistador's ability to continue as a
going-concern. The information set forth below for other periods is unaudited.
The pro forma operating information set forth below assumes that the offering
and related transactions, including (1) repayment of the interim loan made by
Citicorp Real Estate and (2) the effective date of the new management agreement
occurred on April 1, 1997. The pro forma balance sheet assumes such transactions
had occurred as of the respective balance sheet dates. The financial data for
the twelve months ended March 31, 1998 (historical and pro forma), nine months
ended December 31, 1997 (pro forma) and nine months ended September 30, 1998
(historical and pro forma) are under a new basis as a result of the acquisition
of El Conquistador by Patriot/Wyndham. El Conquistador changed its fiscal year-
end to December 31 from March 31 effective for the fiscal year ended December
31, 1997. The data below should be read in conjunction with the financial
statements, related notes and other financial information included herein.

<TABLE>
<CAPTION>
TWELVE MONTHS
TWELVE MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, ENDED MARCH 31,
------------------------------------------ MARCH 31, 1998
1994 1995 1996 1997 1998 PRO FORMA
-------- -------- --------- -------- ------------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT ROOM AND OCCUPANCY DATA)
<S> <C> <C> <C> <C> <C> <C>
Selected Statement of Income Data:
Revenues:
Rooms............................. $ 16,873 $ 37,943 $ 38,817 $ 40,025 $ 41,354 $ 41,354
Food and beverage................. 9,421 27,298 26,189 26,235 27,020 27,020
Casino............................ 2,488 6,055 6,179 6,005 4,931 4,931
Other income...................... 4,344 14,652 19,166 21,959 24,416 24,416
-------- -------- --------- -------- ------------- -------------
33,126 85,948 90,351 94,224 97,721 97,721
Less casino promotional
allowance....................... (152) (1,205) (1,137) (1,266) (674) (674)
-------- -------- --------- -------- ------------- -------------
Total revenues.................. $ 32,974 $ 84,743 $ 89,214 $ 92,958 $ 97,047 $ 97,047
-------- -------- --------- -------- ------------- -------------
-------- -------- --------- -------- ------------- -------------
Operating expenses before
depreciation and amortization..... $ 33,559 $ 85,427 $ 74,163 $ 76,251 $ 78,706 $ 75,192
-------- -------- --------- -------- ------------- -------------
Depreciation and amortization....... 4,274 11,124 10,499 9,147 9,221 5,879(1)
-------- -------- --------- -------- ------------- -------------
Income (loss) from operations
(EBIT)............................ (4,859) (11,808) 4,552 7,560 9,120 15,976
Interest income..................... 109 468 229 199 173 173
Interest expense.................... (5,298) (16,137) (17,022) (17,162 (17,229) (10,750)(2)
-------- -------- --------- -------- ------------- -------------
Net income (loss)............... $(10,048) $(27,477) $ (12,241) $ (9,403) $ (7,936) $ 5,399
-------- -------- --------- -------- ------------- -------------
-------- -------- --------- -------- ------------- -------------
(Deficiency in) partners' capital
beginning of period............... $ 46,189 $ 36,191 $ 8,716 $ (3,525) $ (12,928) $ (12,928)
Partner capital contributions....... 50 2 -- -- 81,923 85,575
(Deficiency in) partners' capital
end of period..................... 36,191 8,716 (3,525) (12,928) 61,059 78,046
Ratio of earnings to fixed
charges........................... (9,861) (27,241) (12,004) (9,166) (7,699) 1.5X
Ratio of EBITDA to fixed charges.... 0.8X 0.9X 1.0X 2.0X
Other Financial Data:
Available rooms(#)(3)............... 751 751 751 751 751 751
Occupancy(3)........................ 72.1% 73.3% 71.0% 72.0% 72.7% 72.7%
Average rate(3)..................... $ 220.99 $ 188.87 $ 198.99 $ 202.86 $ 207.56 $ 207.56
RevPAR(3)(4)........................ $ 159.37 $ 138.42 $ 141.22 $ 146.01 $ 150.87 $ 150.87
Room revenue per available
room(3)........................... NA $112,840 $ 118,794 $123,779 $ 129,224 $ 129,224
Cash flow from operating
activities........................ $ 2,283 $ (4,712) $ 1,906 $ 5,855 $ 4,376
EBITDA(5)........................... $ (585) $ (684) $ 15,051 $ 16,707 $ 18,341 $ 21,855
Selected Balance Sheet Data:
Current assets...................... $ 25,270 $ 15,316 $ 11,823 $ 13,618
Land, building and equipment, net... 197,139 194,557 188,994 183,960
Total assets........................ 243,587 225,191 211,691 205,430
Long-term debt, including current
maturities........................ 181,989 193,034 197,154 199,709
Total liabilities and (deficiency
in) partners' capital............. 243,587 225,191 211,691 205,430
</TABLE>

- ------------

(1) Reflects an adjustment for amortization of offering costs, estimated at $5.0
million, amortized on the straight-line method over the 30-year term of the
bonds at a rate of $166,667 per year, and the effect of the acquisition of
El Conquistador by Patriot/Wyndham related to depreciation and deferred cost
amortization.

(2) Reflects an assumed interest rate of 6.08% for the bonds.

(3) Excludes Las Casitas Village.

(4) RevPAR is equal to the average rate multiplied by occupancy percentage.

(5) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization. El Conquistador believes that EBITDA is a
useful measure of operating performance because (A) it is industry practice
to evaluate hotel companies based on operating income before interest,
depreciation and amortization and minority interests, which is generally
equivalent to EBITDA, and (B) EBITDA is unaffected by the debt and equity
structure of the entity. EBITDA does not represent cash flow from operations
as defined by generally accepted accounting principles, is not necessarily
indicative of cash available to fund all cash flow needs, should not be
considered as an alternative to net income under generally accepted
accounting principles for purposes of evaluating El Conquistador's results
of operations and may not be comparable to other similarly titled measures
used by other companies.

<TABLE>
<CAPTION>
NINE MONTHS
NINE MONTHS NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
ENDED ENDED DECEMBER 31, ------------------------------
DECEMBER 31, DECEMBER 31, 1997 1998
1996 1997 PRO FORMA 1997 1998 PRO FORMA
------------ ------------ ------------ -------- -------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT ROOM AND OCCUPANCY DATA)
<S> <C> <C> <C> <C> <C> <C>
Selected Statement of Income Data:
Revenues:
Rooms............................. $ 24,420 $ 25,130 $ 25,130 $ 31,670 $ 32,679 $ 32,679
Food and beverage................. 17,633 17,429 17,429 20,421 23,327 23,327
Casino............................ 4,011 3,554 3,554 4,266 3,551 3,551
Other income...................... 12,954 14,472 14,472 18,142 20,072 20,072
------------ ------------ ------------ -------- -------- ---------
59,018 60,585 60,585 74,499 79,629 79,629
Less casino promotional
allowance....................... (849) (458) (458) (687) (512) (512)
------------ ------------ ------------ -------- -------- ---------
Total revenues.................. $ 58,169 $ 60,127 $ 60,127 $ 73,812 $ 79,117 $ 79,117
------------ ------------ ------------ -------- -------- ---------
------------ ------------ ------------ -------- -------- ---------
Operating expenses before
depreciation and amortization..... $ 53,572 $ 55,253 $ 53,724 $ 58,889 $ 59,887 $ 56,617
------------ ------------ ------------ -------- -------- ---------
Depreciation and amortization....... 6,856 6,887 4,381(1) 6,922 5,670 5,224 (1)
------------ ------------ ------------ -------- -------- ---------
Income (loss) from operations
(EBIT)............................ (2,259) (2,013) 2,022 8,001 13,560 17,276
Interest income..................... 139 128 128 150 149 149
Interest expense.................... (12,691) (13,157) (8,063)(2) (13,231) (12,159) (8,063)(2)
Loss on early extinguishment of
debt.............................. -- -- -- -- (1,676) --
------------ ------------ ------------ -------- -------- ---------
Net income (loss)............... $(14,811) $(15,042) $ (5,913) $ (5,080) $ (126) $ 9,362
------------ ------------ ------------ -------- -------- ---------
------------ ------------ ------------ -------- -------- ---------
(Deficiency in) partners' capital
beginning of period............... $ (3,525) $(12,928) $ (12,928) $(18,336) $(27,971) $(27,971)
Partner capital contributions....... -- -- 94,851 -- 85,200 100,073
(Deficiency in) partners' capital
end of period..................... (18,336) (27,970) 73,700 23,417 57,103 81,464
Ratio of earnings to fixed
charges........................... (14,633) (14,864) (5,735) (4,902) 1.0X 2.2X
Ratio of EBITDA to fixed charges.... 0.3X 0.3X 0.8X 1.1X 1.5X 2.7X
Other Financial Data:
Available rooms(#)(3)............... 751 751 751 751 751 751
Occupancy(3)........................ 67.6% 69.3% 69.3% 76.4% 74.5% 74.5%
Average rate(3)..................... $ 175.01 $ 175.59 $ 175.59 $ 202.16 $ 213.93 $ 213.93
RevPAR(3)(4)........................ $ 118.24 $ 121.68 $ 121.68 $ 154.47 $ 159.38 $ 159.38
Room revenue per available
room(3)........................... $ 77,456 $ 80,062 $ 80,062 $ 42,170 $ 43,513 $ 43,513
Cash flow from operating
activities........................ $ 13 $ (1,415) $ 2,828 $ 7,176
EBITDA.............................. $ 4,597 $ 4,874 $ 6,402 $ 14,923 $ 19,229 $ 22,500
Selected Balance Sheet Data:
Current assets...................... $ 12,517 $ 13,953 $ 10,637 $ 13,203 $ 21,176
Land, building and equipment........ 185,822 181,127 181,874 232,292 232,292
Total assets........................ 206,755 200,422 198,543 252,250 264,585
Long-term debt, including current
maturities........................ 202,969 204,624 146,274 146,274 134,274 (5)
Total liabilities and (deficiency
in) partners' capital............. 206,755 200,422 198,543 252,250 264,585
</TABLE>

- ------------

(1) Reflects an adjustment for amortization of offering costs, estimated at $5.0
million, amortized on the straight-line method over the 30-year term of the
bonds at a rate of $125,000 for each of the 9 months ended December 31, 1997
and 9 months ended September 30, 1998, and the effect of the acquisition of
El Conquistador by Patriot/Wyndham related to depreciation and deferred cost
amortization.

(2) Reflects an assumed interest rate of 6.08% for the bonds.

(3) Excludes Las Casitas Village.

(4) RevPAR is equal to the average rate multiplied by occupancy percentage.

(5) Reflects the reduction in long-term debt of $25,000,000 owed to the
Government Development Bank for Puerto Rico by El Conquistador, which will
be assumed by Patriot, and the addition of the gross proceeds from this
offering.

RISK FACTORS

In considering whether to purchase the bonds, you should consider the
matters discussed in this section in addition to the other information in this
official statement and prospectus.

Any statements in this official statement and prospectus that are not
strictly historical are forward-looking statements. These statements include,
among other things, statements regarding the intent, belief or expectations of
El Conquistador with respect to (1) the ownership, management and operation of
the Resort, (2) risks associated with the hotel industry and real estate markets
in general, (3) the availability of debt and equity financing, (4) interest
rates, (5) general economic conditions and (6) trends affecting El
Conquistador's financial condition or results of operations.

You are cautioned that any such forward-looking statements reflect El
Conquistador's good faith beliefs. They are not guarantees of future
performance. They involve known and unknown risks, and actual results may differ
materially from those in the forward-looking statements as a result of various
factors. The accompanying information contained in this official statement and
prospectus, including the information set forth below, identify important
factors that could cause such differences.

RISKS ASSOCIATED WITH PAYMENT OF THE BONDS

SUBSTANTIAL DEBT SERVICE OF EL CONQUISTADOR. At September 30, 1998, after
making pro forma adjustments to the actual balance sheet of El Conquistador to
give effect to this offering, the repayment of the interim loan to Citicorp Real
Estate and certain related transactions, total short-term and long-term
indebtedness of El Conquistador was $164,497,353 consisting of the following:

$104,000,000 of the bonds, which are secured by substantially all of the
assets of El Conquistador;

$32,453,458 owed to Posadas de Puerto Rico Associates, Incorporated, an
affiliate of El Conquistador and the Hotel Operator;

$167,585 of equipment financing debt;

$15,510,970 of loans and accrued interest owed to the partners of El
Conquistador;

$8,794,194 of incentive management fees owed to Williams Hospitality;

$1,112,820 of interest on the incentive management fees owed to Williams
Hospitality; and

$2,458,326 of loans and accrued interest owed to Williams Hospitality.

The aggregate annual interest costs and expenses in respect of such
indebtedness is approximately $10,750,000, of which approximately $6,338,000 is
paid on a current basis and the balance of $4,412,000 is deferred. All of the
amounts set forth above other than with respect to the bonds and equipment
financing debt are subordinate to the bonds. The equipment financing debt is
secured solely by the financed equipment. That means that current interest and
principal on the bonds must be paid first and if El Conquistador defaults on its
obligations to pay the bonds, interest and principal on the bonds must be paid
first. The principal of and interest on the bonds are payable at the times set
forth on the inside front cover page of this official statement and prospectus.
We cannot promise that at the time such payments become due El Conquistador will
have the funds necessary to make such payments. If El Conquistador is unable to
generate sufficient cash flow from operations, El Conquistador may be required
to obtain additional equity contributions or refinance its outstanding debt or
obtain additional financing. We cannot promise that any such equity
contributions or refinancing would be possible or that any additional financing,
if available, could be obtained on terms that would be favorable or acceptable
to El Conquistador.

RESTRICTIVE PROVISIONS IN THE LOAN AGREEMENT AND RELATED COLLATERAL
DOCUMENTS. The loan agreement and the related collateral documents restrict in
certain circumstances incurrence of additional indebtedness, creation of
additional liens, disposition of certain assets, engagements in mergers and the
entry into additional transactions with affiliates. These restrictions could
limit the ability of El Conquistador to respond to changing market and economic
conditions and provide for capital expenditures or additional financing.

LIMITATION ON PAYMENT OF ADDITIONAL INTEREST UPON AN EVENT OF TAXABILITY.
The additional amount that El Conquistador may be required to pay to you if the
interest on the bonds becomes subject to U.S. income taxes may not be enough for
you to have as much income after payment of such taxes as you would have had if
the interest remained tax free. There can be no assurance that El Conquistador,
if required, will have the necessary cash to make any such additional payments.

ENFORCEMENT OF REMEDIES AGAINST EL CONQUISTADOR. In the case of an event of
default under the trust agreement, the trustee may proceed to enforce any
remedies under the trust agreement, the loan agreement, or the related
collateral documents. Any foreclosure and other proceedings are dependent, in
many respects, upon judicial action which is subject to discretion or delay.
Under existing laws and judicial decisions, including the United States
Bankruptcy Code, the remedies specified under the trust agreement, the loan
agreement and the related collateral documents may not be readily available or
may be limited. In addition, no assurances can be given that the proceeds of any
sale of El Conquistador's assets upon a foreclosure will be sufficient to pay
principal of and interest on the bonds.

PREPAYMENT OF THE BONDS. The bonds may be required to be prepaid following
an acceleration upon the occurrence of certain events of default under the loan
agreement and the trust agreement. In the event the bonds must be prepaid, we
cannot promise that El Conquistador will have the funds necessary to make such
prepayments.

HOTEL INDUSTRY RISKS

RISKS ASSOCIATED WITH OPERATING A HOTEL. The sole business of El
Conquistador is the ownership and operation of the Resort. El Conquistador's
ability to generate sufficient revenues from operations to pay expenses of
operation and El Conquistador's debt service obligations, including the bonds,
has certain risks. These risks include, among other things:

competition for guests from other hotels, a number of which may have
greater marketing and financial resources and experience than El
Conquistador or the Hotel Operator;

increases in operating costs due to inflation and other factors which may
not be offset in the future by increased room rates;

dependence on business and leisure travelers and tourism, which may
fluctuate and is seasonal;

increases in costs of travel, which may deter travelers;

adverse effects of general and local economic conditions; and

dependence on the Hotel Operator for the marketing and management of the
Resort.

These factors could adversely affect the ability of the Resort to generate
revenues and, therefore, El Conquistador's ability to make payments with respect
to the bonds.

OPERATING COSTS AND CAPITAL EXPENDITURES FOR A HOTEL; HOTEL RENOVATIONS.
The Resort requires substantial ongoing expenditures to replace furniture and
equipment and redecorate or upgrade the Resort in order to continue to provide
first-class facilities to its guests. Capital expenditures at the Resort
(excluding Las Casitas Village) in the past have been as follows:

<TABLE>
<S> <C>
12 months ended March 31, 1998.................................................. $2,554,000
Fiscal year ended March 31, 1997................................................ $1,428,000
Fiscal year ended March 31, 1996................................................ $ 864,000

Fiscal year (9 months) ended December 31, 1997.................................. $1,890,000
Nine months ended December 31, 1996............................................. $1,623,000

Nine months ended September 30, 1998............................................ $5,992,000
Nine months ended September 30, 1997............................................ $ 865,000
</TABLE>

Capital expenditures at the Resort (excluding Las Casitas Village) in 1996
were low due to the newness of the facility. Capital expenditures at the Resort
(excluding Las Casitas Village) have been budgeted as follows:

<TABLE>
<S> <C>
Fiscal year ending December 31, 1998............................................ $8,200,000
Fiscal year ending December 31, 1999............................................ $4,000,000
</TABLE>

As of November 30, 1998, $7,355,138 of this year's capital expenditure
budget had been spent. The capital expenditure budget for fiscal 1998 includes
amounts budgeted for the construction of the new spa at the Resort. We cannot
promise that cash provided from operations will be sufficient to meet the
Resort's future capital expenditure requirements.

Additionally, as a result of Hurricane Georges, approximately $36,000,000
was required to make repairs and replacements at the Resort (excluding Las
Casitas Village). All but approximately $250,000 of such amount is covered by
insurance. For a complete description of the damage caused by Hurricane Georges
at the Resort, see ' -- Events Not Within the Control of El Conquistador.'

Under the terms of the loan agreement, El Conquistador is obligated to
establish a reserve to pay the cost of capital expenditures at the Resort
(excluding Las Casitas Village) and pay for periodic replacement or
refurbishment of furniture, fixtures and equipment. If capital expenditures
exceed El Conquistador's expectations, additional costs could have an adverse
effect on El Conquistador's cash available for payment of the bonds. If El
Conquistador is unable to generate sufficient cash flow to fund the cost of
capital expenditures in the future, the loan agreement permits El Conquistador
to borrow for such purposes. However, we cannot promise that El Conquistador
will be able to obtain such financing if required for future capital
expenditures.

SEASONALITY OF HOTEL BUSINESS. Tourism in Puerto Rico is at its peak during
the months of December through April. Occupancy levels and room rates are lower
during the balance of the year. Successful operation of the Resort is dependent
in large part to a successful high season, the ability of the Resort to attract
guests during the off-season months and careful management of costs throughout
the year. Efforts are made by the Hotel Operator to actively market during off-
season months so as to minimize the effects of seasonality. We cannot promise
that such efforts will be successful.

EVENTS NOT WITHIN THE CONTROL OF EL CONQUISTADOR

Hurricanes and other natural disasters, airline strikes, droughts and water
shortages, civil unrest, acts of war, and other uncontrollable events may
adversely affect occupancy levels at the Resort. Such events could adversely
affect cash flows and profits of El Conquistador. The Resort is particularly
vulnerable to these types of events because of its high debt service
requirements. El Conquistador cannot predict the effect an uncontrollable event
may have on the Resort or El Conquistador's financial condition.

Hurricane Georges passed through Puerto Rico on September 21 and 22, 1998.
Hurricane Georges caused approximately $36,000,000 of property related damage at
the Resort (excluding Las Casitas Village), substantially all of which is
covered by insurance. The Resort lost at least 2,500 room nights during the
10-day period September 20-30, 1998 as a result of Hurricane Georges. El
Conquistador believes such room night losses will be covered by its business
interruption insurance. As a result of Hurricane Georges, the Resort was closed
from September 21, 1998 through October 3, 1998. Additionally, the majority of
condominium units of Las Casitas Village were damaged and were not available to
the Resort until December 10, 1998. Puerto Rico itself and other hotel
properties on the island also suffered extensive damage from Hurricane Georges.
As a result, travelers' perception of Puerto Rico as a leisure destination may
be adversely affected for the 1998/1999 tourist season. The Resort could lose
additional room nights as a result of this perception, which may or may not be
covered by its business interruption insurance. As of the date of this offical
statement and prospectus, the Resort is fully operational. However, El
Conquistador cannot predict the effect that Hurricane Georges will have on its
future bookings. To the extent that additional group and leisure travelers with
reservations cancel their plans to come

to the Resort or additional travelers do not make reservations as a result of
Hurricane Georges, such lost bookings could have a material adverse effect on El
Conquistador's financial condition and results of operations.

REAL ESTATE INVESTMENT RISKS RELATED TO THE RESORT

GENERAL RISKS INCIDENT TO OWNERSHIP OF THE RESORT. El Conquistador's
investment in the Resort is subject to varying degrees of risk generally
incident to the ownership of real property. The underlying value of El
Conquistador's investment in the Resort and its income and ability to make
payments on the bonds will depend on the ability of the Hotel Operator to
operate the Resort in a manner sufficient to maintain or increase revenues and
to generate sufficient income in excess of operating expenses for payment of the
bonds. Income from the Resort may be adversely affected by changes in national
economic conditions, changes in local market conditions due to changes in
general or local economic conditions, the ongoing need for capital improvements,
changes in real estate tax rates and other operating expenses for the Resort,
adverse changes in governmental rules and fiscal policies, adverse changes in
zoning laws, and other events (which may result in uninsured losses), which are
beyond the control of El Conquistador.

PROPERTY TAXES OF THE RESORT. The Resort is subject to real property taxes.
The real property taxes on the Resort may increase or decrease as property tax
rates change and as the value of the property is assessed or reassessed by
taxing authorities. If property taxes increase as a result of such
reassessments, El Conquistador's ability to make payments on the bonds could be
adversely affected. Currently, El Conquistador is in negotiations with the
Municipal Revenue Collection Center in Fajardo, Puerto Rico concerning the real
property taxes on the Resort (excluding Las Casitas Village). The negotiations
concern the valuation computation used by the Municipal Revenue Collection
Center to assess real property taxes for the Resort (excluding Las Casitas
Village). El Conquistador has accrued amounts with respect to real property
taxes for the fiscal years ended March 31, 1995, 1996 and 1997 and the fiscal
year ended (9 months) December 31, 1997. El Conquistador believes these accruals
will be sufficient to pay its real property taxes once negotiations with the
Municipal Revenue Collection Center are completed.

ENVIRONMENTAL MATTERS ASSOCIATED WITH THE RESORT. The operating costs of El
Conquistador may be affected by the obligation to pay for the cost of complying
with existing environmental laws, ordinances and regulations, as well as the
cost of complying with future legislation. Under various federal and Puerto Rico
environmental laws, ordinances and regulations, a current or previous owner or
operator of the Resort may be liable for the costs of removal or remediation of
hazardous or toxic substances on, under, or in the property. Such laws may
impose liability whether or not the El Conquistador or the Hotel Operator knew
of, or was responsible for, the presence of such hazardous or toxic substances.

The Resort maintains certain facilities at which hazardous or toxic
substances are utilized. Petroleum residues from the operation of golf carts at
the Resort are present at the service area for such carts. Periodically, El
Conquistador arranges for the removal of these petroleum residues. Additionally,
there are several diesel fuel storage tanks at the Resort's marina. This diesel
fuel is used by the ferryboats shuttling guests to and from Palominos Island. As
persons who arrange for the transportation, disposal or treatment of hazardous
or toxic substances El Conquistador or the Hotel Operator may also be liable for
the costs of removal or remediation of such substances. Certain environmental
laws and common law principles could be used to impose liability for releases of
hazardous materials into the environment, and third parties may seek recovery
from El Conquistador or the Hotel Operator of real properties for personal
injury associated with exposure to released hazardous materials. The cost of
defending against claims of liability or remediating contaminated property and
the cost of complying with environmental laws could materially adversely affect
El Conquistador's results of operations and financial condition. El Conquistador
is not aware of any potential environmental liability or compliance concerns
that it believes would have a material adverse effect on its business, assets,
results of operations or liquidity.

THE RESORT'S OBLIGATION TO COMPLY WITH AMERICANS WITH DISABILITIES ACT.
Under the Americans with Disabilities Act, all public accommodations are
required to meet certain federal

requirements related to access and use by disabled persons. A determination that
the Resort is not in compliance with the Act could result in the imposition of
fines or an award of damages to private litigants. If El Conquistador were
required to make material modifications to the Resort (exclusively Las Casitas
Village) to comply with the Act, the ability of El Conquistador to make payments
on the bonds could be adversely affected. El Conquistador has not been notified,
and it has no other knowledge of, any material non compliance, liability or
claim under the Act with respect to the Resort.

UNINSURED AND UNDERINSURED LOSSES AT THE RESORT. The loan agreement will
specify comprehensive insurance to be maintained on the Resort (exclusively Las
Casitas Village), including liability, fire and extended coverage. If such
insurance is not maintained, the bonds may be accelerated. El Conquistador
believes that its insurance is adequate for its business. However, there are
certain types of losses, generally of a catastrophic nature, such as
earthquakes, hurricanes and floods, that may be uninsurable or not economically
insurable. El Conquistador currently has hurricane insurance and is in the
process of making claims for property damages of approximately $36,000,000 as a
result of Hurricane Georges. Additionally, El Conquistador has made an intial
claim under its business interruption insurance policy as a result of the loss
of business caused by Hurricane Georges. El Conquistador believes that after all
claims related to Hurricane Georges are made it will continue to be covered for
damages and business interruptions as a result of future hurricanes. However, we
cannot promise that such insurance will continue to be available or affordable.
This may result in insurance coverage that, in the event of a substantial loss,
would not be sufficient to pay the full current market value or current
replacement cost of the loss. Inflation, changes in building codes and
ordinances, environmental considerations, and other factors also might make it
infeasible to use insurance proceeds to replace the property after such property
has been damaged or destroyed. Under such circumstances, the insurance proceeds
received by El Conquistador might not be adequate to restore its economic
position with respect to the Resort.

Additionally, in the event the Resort is damaged or destroyed to the extent
that a mandatory prepayment of the bonds is required pursuant to the loan
agreement, the insurance proceeds received by El Conquistador together with
other funds available to it might not be sufficient to repay the principal of
and interest on the bonds to the extent so required.

LIMITED USE OF RESORT. The Resort may not be suitable for purposes other
than a vacation and convention resort. As a result, in the event of a default,
acceleration of the bonds and any resulting foreclosure sale of the Resort, the
trustee's remedies and the number of entities which could purchase the Resort
would be limited, and the sales price generated thereby might be adversely
affected.

DEVELOPMENT OF LAND ADJACENT TO THE RESORT. There are approximately 192
acres of land located adjacent to the Resort which is owned by affiliates of El
Conquistador. Approximately 42 acres of such property is used by the Resort for
various purposes including employee parking facilities. The additional 150 acres
adjacent to the Resort owned by an affiliate is vacant land. This 150 acre
property may be developed into a time share and/or hotel. It may also be
developed into a golf course or have another use which would be an additional
amenity to the Resort. El Conquistador believes that any such development would
be beneficial to the Resort. However, El Conquistador cannot promise that such
development would not have an adverse effect on its financial condition or
results of operations.

FINANCIAL DIFFICULTIES OF PATRIOT AND WYNDHAM

Patriot/Wyndham has substantial debt and debt service requirements and may
not have enough available funds to meet its near-term debt service requirements.
Patriot/Wyndham is evaluating ways to improve its liquidity and its ability to
meet is debt service obligations. On December 16, 1998, Patriot/Wyndham
announced it had entered into a letter of intent with a group of investors to
make a $1 billion preferred equity investment in Patriot/Wyndham.
Patriot/Wyndham may also seek to refinance or extend due dates on its debt,
issue shares of paired common stock or preferred stock, or sell non-core hotel
assets.

To the extent Patriot/Wyndham is unable to secure additional financing or
successfully refinance its indebtedness, it may not be able to pay its debts as
they come due without selling some or all of its assets, restructuring its debt
or substantially revising its operations. Additionally, Patriot/Wyndham's
inability to close the $1 billion proposed investment, or in the alternative
secure additional capital in the future, could have a material adverse effect on
its financial condition and results of operations.

Although Patriot and Wyndham together own substantially all of the
interests in El Conquistador, neither Patriot nor Wyndham will be liable with
respect to the bonds. Additionally, neither will be obligated to make additional
loans or capital contributions to El Conquistador. However, Patriot/Wyndham's
financial condition could have a material adverse effect on the Resort. The
Resort relies on Patriot/Wyndham for many aspects of its operations, including
management and marketing of the facilities, centralized purchasing and
centralized reservations. Additionally, effective January 1, 1999, the Resort
will be branded a Wyndham Resort'r' and Las Casitas will be branded a Grand
Bay'r' hotel.

If Patriot/Wyndham is unable to improve its financial condition and avoid
defaulting on its obligations, such defaults could have a negative effect on the
financial condition and results of operations of El Conquistador. We cannot
promise that Patriot/Wyndham will be able to improve its financial condition in
the future.

DEPENDENCE ON THE HOTEL OPERATOR

The Resort has historically been managed by Williams Hospitality.
Concurrently with the acquisition of its interest in El Conquistador, Wyndham
International acquired a majority interest in Williams Hospitality. Although the
executive employees of Williams Hospitality have remained, both El Conquistador
and Williams Hospitality have had a change in ownership: Williams Hospitality is
wholly owned by Wyndham International and El Conquistador is owned by
Patriot/Wyndham. Prior to consummation of this offering, El Conquistador will
enter into an amended and restated management agreement with Williams
Hospitality which will provide for different terms, including different
management fees, from the prior management agreement. Williams Hospitality will
enter into an agreement with Wyndham Management with respect to the management
of the Resort and the marketing of the Resort (excluding Las Casitas Village) as
a Wyndham Resort'r' and the use of the Wyndham International reservation system
for the Resort (excluding Las Casitas Village). Williams Hospitality will also
enter into a marketing agreement with Grand Bay for the marketing of Las Casitas
Village as a Grand Bay'r' hotel. The new management agreement imposes on El
Conquistador certain obligations to maintain the Resort and related facilities
at certain quality levels. The failure of El Conquistador to adhere to such
standards could result in the cancellation of the new management agreement or
the loss of one or more of the brand names. Such cancellation could have a
material adverse effect on El Conquistador.

El Conquistador depends solely on the Hotel Operator to manage and operate
the Resort. The new management agreement expires in September 2013, prior to the
maturity date for a majority of the bonds. If the new management agreement is
terminated as a result of a default or other reason, or if the Hotel Operator
decides not to renew the new management agreement or the respective marketing
agreements, the Hotel Operator would have to be replaced. There is a possibility
that a new hotel operator would be obtained on terms not as favorable to El
Conquistador as those set forth in the new management agreement. Conquistador
Holding (SPE), Inc., which will be the managing general partner of El
Conquistador, will have the responsibility for obtaining the services of an
operator. However, the managing general partner is not itself obligated to
operate the Resort. Additionally, no affiliate of the managing general partner
(other than the Hotel Operator) is legally responsible for the performance of
the obligations of Williams Hospitality under the new management agreement or
Wyndham Management and Grand Bay under their arrangements with Williams
Hospitality.

The terms and provisions of the new management agreement were not
negotiated on an arm's-length basis. Such terms and conditions have been set by
the Conquistador Holding, Inc.,

and the Hotel Operator, both of which are controlled by Wyndham International.
Accordingly, the terms, provisions and compensation contained in the new
management agreement may not reflect the fair market value of the services
rendered by the Hotel Operator.

POTENTIAL CONFLICTS OF INTEREST BETWEEN EL CONQUISTADOR AND THE HOTEL OPERATOR

El Conquistador is subject to various conflicts of interest arising out of
its relationship with the managing general partner and the Hotel Operator, and
their respective affiliates. Each of Williams Hospitality and Wyndham Management
operate other hotel and resort properties in Puerto Rico and the Caribbean.
Wyndham Management and Grand Bay also operate other resort destinations. The
management of multiple hotel and resort properties could result in conflicts
with respect to:

the direction of guests to properties other than the Resort;

the desire to maximize overall results of the Hotel Operator and its
affiliates rather than the results of the Resort; and

the availability to the Resort of personnel employed by the Hotel Operator
best suited to manage the Resort.

Such conflicts could result in certain actions or decisions that could have an
adverse effect on El Conquistador.

RISKS OF OPERATING A HOTEL UNDER A BRAND AFFILIATION

The Resort (excluding Las Casitas Village) will soon begin operating under
the Wyndham Resorts'r' brand name and Las Casitas Village will soon begin
operating under the Grand Bay'r' brand name. The continued use of a brand is
generally contingent upon the continuation of the management arrangements
related to the property with the branded operator. If a brand affiliation is
terminated, El Conquistador may seek to obtain a suitable replacement brand
affiliation, or to operate the Resort (excluding Las Casitas Village) and/or Las
Casitas Village independent of a brand affiliation. The loss of a brand
affiliation could have a material adverse effect upon the operations or the
underlying value of the property covered by the brand affiliation because of the
loss of associated name recognition, marketing support and centralized
reservation systems provided by the brand owner. Operating under a brand name is
different from operating more or less independently as the Resort has done in
the past. The reputation and customer perception of the Resort will be
influenced by customers' experiences at other hotels having the same brand. We
cannot promise that the branding of the Resort (excluding Las Casitas Village)
and Las Casitas Village will have a positive affect on the Resort's operations
or that the results of operations in the past are necessarily indicative of
future results of operations. Additionally, we cannot promise that Patriot and
Wyndham International will continue to operate as a paired share real estate
investment trust. If such relationship were to change in the future, the
arrangements with the Hotel Operator could be adversely affected. If the
management arrangements are terminated because of a change in the
Patriot/Wyndham relationship, the continued use of the brand name is likely to
be terminated.

TOURISM TAX EXEMPTIONS APPLICABLE TO EL CONQUISTADOR

The Resort enjoys certain tax exemptions under the Puerto Rico Tourism
Incentive Acts. The grants provided under such acts accord tax exemptions to the
grantees for 10 years, which may be extended for an additional 10 years. El
Conquistador was granted a tax exemption under the provisions of the Puerto Rico
Tourism Incentives Act of 1993. The exemptions do not apply to casino revenues.
The grants are conditioned upon continued compliance with various terms and
conditions set forth in the grants. Failure of El Conquistador to comply with
these requirements could result in the revocation of the grant resulting in the
elimination of the exemptions. We cannot promise that these exemptions will
continue to be available, and if changed, what effect a change would have on El
Conquistador's financial condition or results of operations.

GAMING REGULATIONS ASSOCIATED WITH THE RESORT'S CASINO

The ownership and operation of casinos in Puerto Rico is heavily regulated.
Williams Hospitality was granted a casino franchise as an operator of the casino
at the Resort. Williams Hospitality operates the casino on behalf of El
Conquistador as part of its management function at the Resort. Additionally,
certain of the individuals employed at the Resort are licensed to work in the
casino. The casino is required to renew its casino franchise quarterly. Unless a
change of ownership of a franchisee has occurred or regulators have reason to
believe that reinvestigation of a franchisee is necessary, renewal is generally
automatic. Although El Conquistador and Williams Hospitality have no reason to
believe that the current casino franchise will not be renewed, there can be no
assurance of such renewal.

DEPENDENCE ON HIGHLY-SKILLED PERSONNEL

The success of the Resort depends to a significant extent upon the
performance of the Hotel Operator and its ability to continue to attract,
motivate and retain highly-qualified employees. The loss of services of the
Hotel Operator or a significant number of employees could have a material
adverse effect on El Conquistador. Competition for highly-skilled employees with
management, marketing and other specialized training in the hotel and casino
business is intense, especially in Puerto Rico and other parts of the Caribbean.
We cannot promise that the Hotel Operator will be successful in attracting and
retaining such personnel. Specifically, El Conquistador may experience increased
costs in order to attract and retain skilled employees.

COMPETITION WITHIN THE HOTEL AND CASINO BUSINESS

The hotel and casino business in the Caribbean region is highly
competitive. The Resort competes with numerous hotels and resorts on the island
of Puerto Rico (including 18 other hotels and resorts with casinos) and on other
Caribbean and Bahamian islands as well as those in the southeastern United
States, Hawaii and Mexico. The Resort (excluding Las Casitas Village) competes
with such chains as Hyatt, Marriott, Hilton and Westin as well as numerous other
hotel and resort chains and independent hotel and motel operators. Las Casitas
Village competes with such chains as The Four Seasons Resorts and the Ritz
Carlton. During the past three years, five new hotels and casinos have opened in
Puerto Rico alone and an additional hotel and casino is expected to open in
Puerto Rico during 1999.

The Resort is a large destination resort and competes for much of its group
business with other destination resorts located in Puerto Rico, the Caribbean,
the continental United States and Hawaii. The ability of the Resort to
effectively compete in this market depends on a number of factors including:

high quality service

aggressive marketing

competitive rates

varied facilities and accommodations

Continuous capital improvement programs are essential to stay current with
industry trends and maintain the Resort's market share. Many hotels with which
the Resort competes are owned or managed by hotel chains possessing
substantially greater financial and marketing resources than those of El
Conquistador and the Hotel Operator. We cannot promise that the Resort will
effectively compete in the future.

EL CONQUISTADOR'S RELIANCE ON SINGLE MARKET

The Resort is located in Fajardo, Puerto Rico. Any adverse events such as
hurricanes and other natural disasters, droughts and water shortages, labor
strikes and the like which may affect Puerto Rico generally will adversely
affect the Resort's entire business. Additionally, Puerto Rico is served by a
small number of airlines and the market is dominated by American Airlines. Any

adverse events in the airline industry as a whole, and especially to American
Airlines, including airline strikes, increased fuel prices or accidents could
have a material adverse effect on El Conquistador's business and financial
condition.

El Conquistador lacks asset diversification since the Resort is, and will
remain, its only property. The ability of El Conquistador to comply with its
obligations under the loan agreement and the trust agreement, including its
obligation to pay principal and interest on the bonds, depends primarily upon
the future operating revenues and expenses of the Resort. El Conquistador's
financial condition may be affected by factors such as:

competition from other resort hotels

seasonality of the hotel industry

potential over-building in the hotel industry

inflation and other economic conditions

the existence of favorable and economical air travel services

the cost and availability of labor

the cost and availability of utilities

the cost and availability of adequate insurance for risks such as property
damage and general liability

other events beyond El Conquistador's control

RELATIONSHIP BETWEEN CITICORP FINANCIAL SERVICES AND CITICORP REAL ESTATE

Citicorp Financial Services Corporation is the lead underwriter for the
bonds. Citicorp Real Estate, Inc. made a $90,000,000 interim loan to El
Conquistador on August 3, 1998. The proceeds from the sale of the bonds will be
used to repay $90,000,000 to Citicorp Real Estate. Citicorp Financial Services
and Citicorp Real Estate are affiliated entities. In connection with the interim
loan, El Conquistador agreed that Citicorp Financial Services would be its
exclusive financial advisor for the sale of the bonds. El Conquistador agreed to
pay Citicorp Financial Services an underwriting fee and structuring/management
fee with respect to the issuance of the bonds. It is possible that El
Conquistador could have negotiated better terms with an underwriter that was not
affiliated with Citicorp Real Estate.

ABSENCE OF SECONDARY MARKET FOR THE BONDS; RATING MAINTENANCE FOR THE BONDS

El Conquistador and AFICA do not intend to apply for listing of the bonds
on a securities exchange. There is currently no secondary market for the bonds.
There will likely be no secondary market for the bonds. If such a market were to
exist, the bonds could trade at prices that may be lower than the initial market
values thereof depending on many factors, including prevailing interest rates
and the markets for similar securities.

The liquidity of the bonds also may be adversely affected by general
declines in the market for similar securities. Such a decline may adversely
affect such liquidity independent of the financial performance of, and prospects
for, El Conquistador.

The investment rating initially assigned to the bonds may be downgraded or
withdrawn. Such a rating change could adversely affect the value of and market
for the bonds.

USE OF PROCEEDS

The bonds will be issued to provide for the repayment of the interim loan,
including interest thereon, provided by Citicorp Real Estate to El Conquistador
on August 3, 1998, funding certain reserves and paying certain costs and
expenses of issuing the bonds. The proceeds of the interim loan were used to
repay The Bank of Tokyo-Mitsubishi, Ltd. for advances it made to El Conquistador
to redeem a portion of AFICA's Tourism Revenue Bonds, 1991 Series A and 1991
Series C (El Conquistador Resort Project), in the aggregate outstanding
principal amount of $120,000,000 and to pay fees and expenses in connection with
the interim loan. The 1991 AFICA bonds would have matured on March 9, 1999 and
bore interest at floating rates. The 1991 AFICA bonds were secured by, among
other things, a letter of credit issued by The Bank of Tokyo-Mitsubishi, Ltd.
The 1991 AFICA bonds were subject to mandatory redemption on the interest
payment date preceding the expiration date of the letter of credit. The letter
of credit was scheduled to expire September 9, 1998 and the 1991 AFICA bonds
were therefore redeemed on August 3, 1998.

The interim loan bears interest at a floating rate which is currently
7.75%. The interim loan had an original maturity date of November 3, 1998. Due
to the damage to the Resort from Hurricane Georges, the offering of the bonds
was delayed. El Conquistador and Citicorp Real Estate agreed on an extension of
the maturity date of the interim loan until January 29, 1999.

El Conquistador is indebted to the Government Development Bank for Puerto
Rico in the aggregate principal amount of $25,000,000 pursuant to a term loan.
Contemporaneously with the issuance of the bonds, the indebtedness of El
Conquistador to the Government Development Bank will be assumed by Patriot,
which beneficially owns approximately 77% of El Conquistador. El Conquistador
will be released from its obligation to pay such indebtedness.

Set forth below are the estimated sources and uses of proceeds with respect
to the sale of the bonds:

<TABLE>
<S> <C> <C>
Source
Gross bond proceeds.............................................................. $104,000,000
------------
Total sources............................................................... $
------------
------------
Uses
Repayment of the interim loan.................................................... $ 90,000,000
Reserve fund..................................................................... 9,000,000
Cost of issuance of the bonds:
SEC registration fee......................................... $ 30,612
Printing expenses............................................
Accounting fees and expenses.................................
Legal fees and expenses......................................
Trustee fees................................................. 30,000
Miscellaneous expenses.......................................
Subtotal..........................................................
AFICA fee........................................................................ $ 520,000
Underwriters' discount...........................................................
Underwriters' structuring/management fee.........................................
------------
Total uses.................................................................. $104,000,000
------------
------------
</TABLE>

THE RESORT

GENERAL

The Resort, a world class destination resort complex, is one of the leading
hotel and casino properties in Puerto Rico. The Resort has 751 guest rooms, an
18-hole championship golf course, a marina, seven tennis courts, 90,000 square
feet of convention and meeting facilities, six lounges and nightclubs, 12
restaurants, a 10,000 square foot casino, 25 retail shops, a fitness center and
five pool areas, situated on a bluff overlooking the convergence of the Atlantic
Ocean and the Caribbean Sea in Fajardo, Puerto Rico. The Resort also features a
secluded beach located on a private island three miles offshore commonly known
as Palominos Island.

In addition, the Resort generally has available 90 condominium units known
as Las Casitas Village. Almost all of the owners of these condominiums have
entered into rental arrangements with El Conquistador pursuant to which the
units are made available as additional guest rooms of the Resort. Each unit
consists of one, two or three bedrooms which can be divided into up to 167
separate rooms which are made available to the inventory of luxury rooms at the
Resort. Guests at Las Casitas Village are able to enjoy all the facilities of
the Resort.

The Resort offers group and conference facilities for groups of up to 2,000
and also attracts the individual upscale leisure traveler. The upscale leisure
traveler is attracted to the Resort by the Caribbean climate and resort
amenities including the casino, swimming pools, whirlpools, tennis, golf and
water sports facilities, a health club and entertainment lounges. 'Blue Chip'
corporate and incentive groups comprise a significant portion of the Resort's
clientele due to its convention and meeting facilities as well as the other
Resort amenities.

The Resort has received the Gold Key Award by Meetings & Conventions
Magazine and the Paragon Award by Corporate Meetings & Incentives Magazine for
excellence in meetings and conventions. It has been awarded the American
Automobile Association 'Four Diamond' rating for each of its five years of
operation. Las Casitas Village at the Resort was awarded a 'Five Diamond' rating
(the highest rating) by the American Automobile Association commencing in the
fourth quarter of 1997.

The Resort (excluding Las Casitas Village) is expected to be marketed as a
Wyndham Resort'r' commencing with the 1998-99 winter season. As a Wyndham
Resort, the property will be included in Wyndham International's national and
worldwide marketing campaigns as well as the Wyndham International reservation
system. Las Casitas Village is expected to be marketed as a Grand Bay'r' hotel
also commencing with the 1998-99 winter season and will likewise be included in
Grand Bay's national and worldwide marketing campaigns. Wyndham Management and
Grand Bay have substantially greater marketing resources than were available to
the Resort in the past.

The PricewaterhouseCoopers Lodging Research Network has independently
ranked more than 40 U.S. hotel brands owned by publicly traded companies by
growth in revenue per available room for the second quarter of 1998 vs. the
year-earlier period. The Wyndham Resorts'r' brand was the top-performing upper
upscale hotel brand with revenues per available room growth of 37.5% in the
second quarter of 1998 versus the second quarter of 1997. The Grand Bay'r' brand
was the second-best performing upper upscale brand, with revenues per available
room growth of 12.3% during the period.

During the 12-month period ended March 31, 1998, the Resort (excluding Las
Casitas Village) had an average occupancy of 72.7% and gross revenues of
$97,893,000. The Resort (excluding Las Casitas Village) finished its third full
fiscal year ended March 31, 1997 with an average occupancy of 72.0% and gross
revenues of $94,423,000. This compares to an average occupancy of 71.0% and
gross revenues of $90,351,000 for the fiscal year ended March 31, 1996 and an
average occupancy of 73.3% and gross revenues of $85,948,000 for the fiscal year
ended March 31, 1995. During the fiscal year (9 months) ended December 31, 1997,
the Resort (excluding Las Casitas Village) had an average occupancy of 69.3% and
gross revenues of $60,713,000 compared to an average occupancy of 67.6% and
gross revenues of $59,158,000 during the corresponding 9-month period ended
December 31, 1996. During the 9-month periods ended September 30, 1998 and 1997,
the Resort

(excluding Las Casitas Village) had an average occupancy of 74.5% and 76.4%,
respectively, and gross revenues of $79,778,000 and $74,649,000, respectively.

During the 12-month period ended March 31, 1998 and the fiscal years ended
March 31, 1997, 1996 and 1995 daily room rates at the Resort (excluding Las
Casitas Village) were $207.56, $202.86, $198.99 and $188.87, respectively. The
average daily room rates at the Resort (excluding Las Casitas Village) during
the fiscal year (9 months) ended December 31, 1997 and the 9-month period ended
December 31, 1996 were $175.59 and $175.01, respectively. During the 9-month
periods ended September 30, 1998 and 1997, the average daily room rate at the
Resort (excluding Las Casitas Village) was $213.93 and $202.16, respectively.

During the 12-month period ended March 31, 1998 and the fiscal years ended
March 31, 1997, 1996 and 1995, the Resort's (excluding Las Casitas Village)
capital expenditures for the purchase of property and equipment were $2,554,000,
$1,428,000, $864,000 and $3,002,000, respectively. During the fiscal year (9
months) ended December 31, 1997 and the 9-month period ended December 31, 1996,
the Resort's (excluding Las Casitas Village) capital expenditures for the
purchase of property and equipment were $1,890,000 and $1,623,000, respectively.
During the 9-month periods ended September 30, 1998 and 1997, the capital
expenditures at the Resort (excluding Las Casitas Village) were $5,992,000 and
$865,000, respectively.

The Resort has historically been managed by Williams Hospitality, an
affiliate of El Conquistador. Williams Hospitality's sole business was the
operation of the Resort and two other Puerto Rico hotel properties owned by
affiliates of El Conquistador. As of January 16, 1998, Wyndham International
acquired the majority interest in Williams Hospitality's and in March 1998
acquired the remaining interests. Prior to consummation of this offering, El
Conquistador will enter into an amended and restated management agreement with
Williams Hospitality. Williams Hospitality will then enter into an agreement
with Wyndham Management with respect to the management of the Resort and the
marketing of the Resort (excluding Las Casitas Village) as a Wyndham Resort'r'.
Williams Hospitality will also enter into a marketing agreement with Grand Bay
with respect to the marketing of Las Casitas Village as a Grand Bay'r' hotel.

Set forth below is a chart which contains certain historical and financial
information concerning the Resort (excluding Las Casitas Village):

<TABLE>
<CAPTION>
ROOM REVENUE
AVERAGE AVERAGE PER RENOVATION
PERIOD OCCUPANCY DAILY RATE AVAILABLE ROOM EXPENDITURES
- ----------------------------------------------- --------- ---------- -------------- ------------
<S> <C> <C> <C> <C>
April 1, 1997 - March 31, 1998(1).............. 72.7% $ 207.56 $ 55,065 $2,554,000
April 1, 1996 - March 31, 1997................. 72.0% $ 202.86 $ 53,294 $1,428,000
April 1, 1995 - March 31, 1996................. 71.0% $ 198.99 $ 51,687 $ 864,000
April 1, 1994 - March 31, 1995................. 73.3% $ 188.87 $ 50,523 $3,002,000
</TABLE>

- ------------

(1) Financial information for this period is unaudited. El Conquistador changed
its fiscal year-end to December 31 from March 31 effective for the fiscal
year ended December 31, 1997.

ACCESS

The Resort is located on the northeast coast of Puerto Rico, approximately
35 miles east of the Luis Munoz Marin International Airport. Access from San
Juan and the Luis Munoz Marin International Airport to the Resort is provided by
Puerto Rico Highway 3, a four lane thoroughfare. The Luis Munoz Marin
International Airport is currently served by approximately 30 United States and
international airlines, including American Airlines, which uses San Juan as a
hub for its intra-Caribbean service. Frequent, scheduled passenger air services
connects Puerto Rico to the mainland United States, Europe and South America.
Flying time is 3 1/4 hours to New York, 2 1/4 hours to Miami, 1 1/2 hours to
Caracas and 8 hours to Europe. At present, according to the Official Airline
Guide, a recognized travel industry source, there is daily non-stop service
between San Juan and 17 United States cities, including, New York, Chicago,
Dallas, Miami, Atlanta, Boston and numerous others. There is also regularly
scheduled service between Puerto Rico and other Caribbean islands and major
Latin American and European cities. El Conquistador

believes that the abundance of non-stop flights to San Juan provides a major
competitive advantage for resorts in Puerto Rico over those elsewhere in the
Caribbean. However, airline service for Puerto Rico is wholly outside the
control of El Conquistador and such service may change at any time.

CASINO CREDIT POLICY

The Resort's casino extends credit to qualified players who satisfy its
credit review procedures. The procedures include external credit verification
and internal management level approvals. Credit play at the Resort has not been
significant since its opening in November 1993 and credit losses have been
immaterial. Gaming debts are enforceable in Puerto Rico and the majority of
states in the United States. Those states that do not enforce gaming debts will
nonetheless generally allow enforcement of a judgment obtained in a jurisdiction
such as Puerto Rico. Due to the unenforceability generally of gaming debts in
Latin America, procedures have been established to obtain promissory notes from
most Latin American credit casino clients.

GOVERNMENT REGULATION AND LICENSING

Puerto Rico legalized gambling by the adoption of Law No. 221 on May 15,
1948. The Office of the Commissioner of Financial Institutions of Puerto Rico is
responsible for investigating and licensing casino owners and the Gaming
Division of the Tourism Company of Puerto Rico regulates and supervises casino
operations. A government inspector must be on-site whenever a casino is open.
Among its responsibilities, the Gaming Division licenses all casino employees
and enforces regulations relating to method of play and operation of the casino.
The casino at the Resort is subject to strict internal controls imposed by El
Conquistador and the Hotel Operator over all facets of its operations, including
the handling of cash and security measures. Each casino pays the government of
Puerto Rico a casino franchise fee depending on total play or drop in the
casino, which fee ranges from $50,000 to $200,000. Williams Hospitality was
granted a casino franchise as an operator of the casino at the Resort. Williams
Hospitality operates the casino on behalf of El Conquistador as part of its
management function at the Resort. The Resort pays an annual casino franchise
fee of $150,000 in equal quarterly installments. Williams Hospitality is
required to renew its casino franchise quarterly; and, unless a change of
ownership of the franchisee has occurred or the gaming authorities have reason
to believe that reinvestigation of the franchisee is necessary, renewal is
generally automatic.

The Resort is also subject to various local laws and regulations affecting
its business, including provisions relating to fire safety, sanitation, health
and the sale of alcoholic beverages.

SEASONALITY

Tourism in Puerto Rico is at its peak during the months of December through
April. Most hotels, despite reducing their room rates during the off-season
months, experience decreased occupancy and lower revenues. The Resort expects
that group business developed during the off-season and the shoulder-season will
reduce the effect of seasonality on its operations.

During the 12-month period ended March 31, 1998 and the fiscal year ended
March 31, 1997, the Resort's (excluding Las Casitas Village) monthly occupancy
ranged from 54.7% to 85.0% and 47.1% to 85.5%, respectively, with an average
occupancy of 72.7% and 72.0%, respectively. During the fiscal year (9 months)
ended December 31, 1997, the Resort's (excluding Las Casitas Village) monthly
occupancy ranged from 54.7% to 85.0% with an average occupancy of 69.3% compared
to monthly occupancy ranging from 47.1% to 84.2% and an average occupancy of
67.6% for the 9-month period ended December 31, 1996. During the 9-month periods
ended September 30, 1998 and 1997, the Resort's (excluding Las Casitas Village)
monthly occupancy ranged from 46.5% to 86.9% and 54.7% to 88.2%, respectively,
with an average occupancy of 74.5% and 76.4%, respectively. The in-season
average occupancy for December 1997 to April 1998 was 78.5% compared to 79.8%
and 77.1% for the corresponding periods ending in April 1997 and April 1996,
respectively.

COMPETITION

The hotel and casino business in the Caribbean region is highly
competitive. The Resort competes with other hotels and resorts on the island of
Puerto Rico and on other Caribbean and Bahamian islands and in the southeastern
United States, Hawaii and Mexico. The Resort competes with such chains as Hyatt,
Marriott, Hilton and Westin as well as numerous other hotel and resort chains
and independent hotel and motel operators. Las Casitas Village competes with
such chains as The Four Seasons Resorts and the Ritz Carlton. Some of these
competing properties are owned or managed by hotel companies possessing
substantially greater financial and marketing resources than those of El
Conquistador and Hotel Operator.

El Conquistador believes that Puerto Rico offers many advantages over
geographical areas in which competing properties are located. Unlike most other
Caribbean islands, Puerto Rico is served by many direct air flights from the
continental United States and has a highly developed economy and a well-educated
population. Moreover, Puerto Rico is a Commonwealth of the United States,
freeing mainland visitors from concerns about foreign currencies or customs and
immigration laws. Unlike resort areas in the southeastern United States, Puerto
Rico enjoys a mild subtropical climate throughout the year and offers legalized
gambling.

The resort hotels in Puerto Rico that most directly compete with the Resort
are the Hyatt Regency Cerromar Beach Resort & Casino with, according to the
Official Hotel Guide, 506 rooms, the Hyatt Dorado Beach Resort & Casino with,
according to the Official Hotel Guide, 298 rooms, and the Westin Rio Mar Beach
Resort & Country Club, which is also located in the northeastern section of
Puerto Rico with, according to the Official Hotel Guide, 600 rooms, all of which
offer services, meeting space and recreational facilities comparable to those
offered by the Resort. The Caribe Hilton Hotel located in San Juan, Puerto Rico
has recently announced significant renovation and expansion plans to position it
to compete with the Resort for group business. All of these hotels are beach
and, with the exception of the Caribe Hilton Hotel, golf resorts and have an
experienced hotel operator that has available to it major hotel chain resources.
The Resort competes with the foregoing resort hotels (as well as those in other
destination resort locales) on the basis of price, service, the extent and
quality of facilities, ease of access, and its ability to promote the Resort to
travel agents, meeting planners, and directly to the public. In this regard, El
Conquistador expects to benefit from the marketing programs and reservation
services of Wyndham Management and Grand Bay.

EMPLOYEES

Approximately 1,490 persons are employed at the Resort, of whom 120 are
casino employees. None of the employees at the Resort is represented by labor
unions. The number of persons employed at the Resort varies from season to
season and is at its highest during the high season of December through April
when occupancy is at its highest. Under the new management agreement, all of the
persons employed at the Resort will become employees of the Hotel Operator, not
El Conquistador. El Conquistador will continue to bear all costs with respect to
employees at the Resort. Such costs are considered reimbursable expenses and are
in addition to the management fees paid to the Hotel Operator. El Conquistador
considers the current relationships between the Resort and its employees to be
satisfactory.

PROPERTY

The Resort is situated on approximately 220 acres in Fajardo, Puerto Rico.
Additionally, an affiliate of El Conquistador owns approximately 42 additional
acres of land in the vicinity of the Resort which has various uses including
employee parking facilities for the Resort. The following table sets forth the
material properties which constitute the Resort (excluding Las Casitas Village)
as of the date hereof. El Conquistador believes that the properties listed in
the following table are in good repair and are adequate for their respective
purposes. El Conquistador owns substantially all of the machinery, equipment,
furnishings, goods and fixtures used in its business, all of which are well
maintained and satisfactory for the purposes intended. Some of El Conquistador's
personal property utilized at the Resort is subject to security interests held
by third parties who financed

the acquisition of such property. El Conquistador believes that its properties
are adequately covered by insurance.

<TABLE>
<CAPTION>
APPROXIMATE
LOCATION PRINCIPAL USE SIZE INTEREST ENCUMBRANCES
- ------------------------------------ ----------------- ------------------ ------------ ------------
<S> <C> <C> <C> <C>
Fajardo, PR......................... Hotel and Casino 854,000 sq. ft.(1) Fee simple (2)
Palominos Island
Fajardo, PR....................... Beach/Watersports 90 acres Leasehold(3) (4)
</TABLE>

- ------------

(1) The approximate size represents the square footage size of the structures,
which constitute the Resort (excluding Las Casitas Village).

(2) Assuming completion of this offering, will be subject to a first mortgage
lien securing a mortgage note in the principal amount of $104,000,000
securing the bonds.

(3) Leased by El Conquistador pursuant to a Deed of Lease dated December 15,
1990. The term of the Deed of Lease is for 32 years, expiring November 30,
2022, with two options to extend the term for additional five-year periods.
Annual rent for Palominos Island is $210,000 for the year ending November
30, 1998, which annual rent increases $30,000 every five years thereafter
commencing December 1, 2002, including during extensions of the original
term.

(4) Assuming completion of this offering, the Deed of Lease will be subject to a
first leasehold mortgage lien securing a mortgage note in the principal
amount of $2,000,000 securing the bonds.

MANAGEMENT AND MARKETING OF THE RESORT

El Conquistador is a party to a management agreement with Williams
Hospitality which will be terminated effective December 31, 1998. The existing
management agreement requires El Conquistador to pay to Williams Hospitality a
base management fee equal to 3.5% of the Resort's gross revenues and an
incentive management fee equal to 10% of the Resort's gross operating profit.
Gross operating profit means income after deduction of the base management fee
and before insurance, interest and rent expenses, depreciation and amortization,
and payment of property taxes. Payment of the incentive management fees are
subordinate to all obligations of El Conquistador to third parties as well as
certain obligations to its partners. To date, payment of all incentive
management fees has been deferred. Prior to the acquisition of Williams
Hospitality by Wyndham International, Williams Hospitality's sole business was
primarily to manage three hotels in Puerto Rico: the Resort, the El San Juan
Hotel & Casino and the Condado Plaza Hotel & Casino. Following Wyndham
International's acquisition of Williams Hospitality during 1998, the employees
of Williams Hospitality became employees of Wyndham International and in many
cases their responsibilities have increased to include other properties operated
by Wyndham International.

The following table sets forth the basic management fees paid and the
incentive management fees earned by Williams Hospitality during the periods set
forth. Such fees do not include amounts Williams Hospitality was reimbursed for
certain administrative expenses incurred in connection with its management of
the Resort which are set forth separately in the following table.

<TABLE>
<CAPTION>
REIMBURSED
TOTAL ADMINISTRATIVE
BASIC INCENTIVE FEES EXPENSES OF
MANAGEMENT MANAGEMENT PAID AND WILLIAMS
FEES PAID FEES EARNED EARNED HOSPITALITY
---------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
12-months ended March 31, 1998............................... $3,426,000 $2,457,000 $5,883,000 $3,284,000
12-months ended March 31, 1997............................... 3,305,000 2,376,000 5,681,000 3,258,000
Fiscal year (9 months) ended December 31, 1997............... 2,125,000 860,000 2,985,000 2,497,000
9 month period ended December 31, 1996....................... 2,071,000 899,000 2,970,000 2,082,000
9 month period ended September 30, 1998...................... 2,792,000 2,392,000 5,184,000 1,665,000
9 month period ended September 30, 1997...................... 2,613,000 1,995,000 4,608,000 2,468,000
</TABLE>

El Conquistador will enter into an amended and restated management
agreement with Williams Hospitality for the management and marketing of the
Resort. The new management

agreement will become effective January 1, 1999 and will expire in September
2013. Williams Hospitality will enter into an agreement with Wyndham Management
with respect to the management of the Resort and the marketing of the Resort
(excluding Las Casitas Village) as a Wyndham Resort. The term of the agreement
between Williams Hospitality and Wyndham Management will coincide with the term
of the Management Agreement. Williams Hospitality will also enter into a
marketing agreement with Grand Bay with respect to the marketing of Las Casitas
Village as a Grand Bay hotel. The agreement between Williams Hospitality and
Grand Bay will be for a term of one year and will be renewable on a yearly basis
if both Williams Hospitality and Grand Bay consent to such renewal.

El Conquistador will enter into the new management agreement with Williams
Hospitality rather than Wyndham Management in order to preserve the 401(k)
retirement plan of the employees of the Resort. Williams Hospitality will
provide administrative services with respect to employees of the Resort. It is
intended that all employees of the Resort become employees of Williams
Hospitality in the future. Employees of the Resort would be negatively affected
with respect to their 401(k) plan had they become employees of Wyndham
Management.

Under the new management agreement, El Conquistador will be required to pay
to Williams Hospitality a base management fee of 2.0% of the gross revenues of
the Resort (excluding Las Casitas Village), and 3.0% of the gross room revenues
from Las Casitas Village. El Conquistador is also required to pay a trade name
fee of 0.5% of gross room revenues of the Resort (excluding Las Casitas
Village), and marketing fees of 1.5% of gross room revenues of the Resort
(excluding Las Casitas Village) and 1.0% of the gross room revenues of Las
Casitas Village. In addition, El Conquistador is solely responsible for all of
the expenses incurred by the Hotel Operator in connection with managing and
operating the Resort and is solely responsible for its allocable share of the
cost of the Hotel Operator's national sales office efforts.

The fees payable under the new management agreement will differ from those
under the existing management agreement as follows:

the base management fee will be reduced from 3.5% to 2.0% of gross
revenues of the Resort (excluding Las Casitas Village)

the base management fee will be reduced from 3.5% to 3.0% of gross
revenues of Las Casitas Village

the 10.0% incentive fee under the existing agreement will be eliminated

there will be a new trade name fee of 0.5% of gross room revenues of the
Resort (excluding Las Casitas Village)

there will be new marketing fees of 1.5% of gross room revenues of the
Resort (excluding Las Casitas Village) and 1.0% of gross room revenues of
Las Casitas Village

The following table sets forth the fees that would have been payable to
Williams Hospitality for the periods shown if the new management agreement had
been in effect during such periods.

<TABLE>
<CAPTION>
1.0%
0.5% MARKETING
2.0% BASE 3.0% TRADE 1.5% FEE FOR
MANAGEMENT FEE FOR NAME MARKETING LAS TOTAL
FEE LAS CASITAS FEE FEE CASITAS FEES
---------- ----------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
12-month period ended March 31,
1998.............................. $1,846,907 $ 206,714 $200,120 $ 600,359 $68,905 $2,923,005
Fiscal year (9 months) ended
December 31, 1997................. 1,190,042 140,463 125,648 376,944 46,821 1,879,919
9-month period ended September 30,
1998.............................. 1,559,321 191,003 163,393 490,180 63,668 2,467,564
</TABLE>

The new management agreement provides that Williams Hospitality has
exclusive supervision, control and discretion in the management, maintenance and
operation of the Resort (excluding Las Casitas Village) and limited management
responsibilities with respect to Las Casitas Village. The Hotel Operator has
sole responsibility and total discretion on all matters with respect to the

employees of the Resort and all such employees will become employees of the
Hotel Operator or its affiliates, not El Conquistador. All leases and concession
agreements relating to the Resort require the approval of each of the Hotel
Operator and El Conquistador. The Hotel Operator is responsible for providing
repairs to and maintenance of the Resort, exclusive of Las Casitas Village, the
payment for which is reimbursed by El Conquistador. The Hotel Operator will
notify El Conquistador of the need for all capital improvements of the Resort,
exclusive of Las Casitas Village. However, completion of such capital
improvements is the responsibility of El Conquistador. The Hotel Operator may
use its affiliates to furnish goods or services to the Resort, but the terms of
such arrangements must be no less favorable than those reasonably obtainable
from an unrelated party.

The Hotel Operator's business strategy is to maximize the economic
potential of the Resort. The Hotel Operator is constantly seeking new ways to
reduce operating costs as well as upgrade or add amenities to the Resort to
enhance the overall experience of its guests. One new restaurant and four new
retail shops were recently opened at the Resort. Additionally, the Resort will
be enhanced by a Golden Door'r' spa which opened in December 1998.

El Conquistador believes that the Resort will benefit significantly from
the use of the Wyndham Resorts'r' and Grand Bay'r' trade names in the marketing
of the Resort and Las Casitas Village. The Hotel Operator promotes the multiple
products of Wyndham International under a series of unified marketing programs
and the proprietary reservation system. As a result, Wyndham International
hotels enjoy a large market presence significant enough to yield cost savings by
centralizing functions such as sales, marketing, reservations and advertising.
According to industry studies, the Wyndham Resorts'r' brand was the top
performing upper upscale hotel brand with respect to revenue per available room
growth of 37.5% in the second quarter of 1998 versus the second quarter of 1997.
With respect to the luxury Grand Bay hotels, the Hotel Operator's aim is to
consistently deliver excellent and personalized service and 'seek opportunities
to create memories.' To better position the Grand Bay'r' brand and to develop a
unified luxury concept and brand, the Hotel Operator developed and is currently
implementing a unified marketing program designed to position this brand as a
collection of distinctive, luxury hotels and resorts competing with other
high-end products.

The Hotel Operator intends to initiate a multi-million dollar advertising
campaign during January 1999. The advertising campaign will predominately
feature the Resort as the flagship of the Wyndham Resorts. The Resort's portion
of the cost of the advertising campaign will be funded by the marketing fees
paid by El Conquistador to the Hotel Operator. The Hotel Operator expects that
the advertising campaign will increase the exposure and awareness of the Resort
and its amenities and, as a result, will increase the occupancy rate and
revenues of the Resort. We cannot promise, however, that the advertising
campaign will be a success with respect to either Wyndham Resorts as a whole or
the Resort specifically.

The advertising campaign may feature other Wyndham Resorts that compete
directly or indirectly with the Resort such as the Wyndham Aruba Beach Resort &
Casino in Palm Beach, Aruba, the Wyndham Rose Hall Golf & Beach Resort in
Montego Bay, Jamaica, the El San Juan Hotel & Casino in San Juan, Puerto Rico
and the Buena Vista Palace in Orlando, Florida. We cannot promise that the
advertising campaign will not result in a loss of Resort guests to other Wyndham
hotels.

Las Casitas Village will be branded as a Grand Bay hotel and, like other
Grand Bay hotels, will be marketed to the upper upscale traveler. All Grand Bay
hotels intend to install Golden Door'r' spas on the hotel premises. An
aggressive marketing campaign for Grand Bay hotels will be launched in early
1999 promoting Las Casitas Village as well as other Grand Bay hotels such as the
Grand Bay Hotel in Miami, Florida, the Peaks in Telluride, Colorado, the
Boulders in Boulder, Colorado, the Grand Bay Hotel in Scottsdale, Arizona and La
Paloma in Tucson, Arizona. This campaign will be part of Wyndham International's
strategy to consolidate the marketing of the properties acquired by
Patriot/Wyndham during the past two years and enhance the Grand Bay brand. The
Las Casitas Village portion of the campaign will be funded by the marketing fees
paid to the Hotel Operator with respect to Las Casitas Village.

The Resort will now have available the resources of the extensive sales and
marketing networks of Wyndham Resorts and Grand Bay. Prior to 1998, the Resort
had an in-house marketing staff of approximately 8 employees, a U.S. mainland
exclusive marketing service with 40 employees located primarily in Miami,
Florida and New York, New York and sales agents in South America and Europe.

El Conquistador has agreed to indemnify and hold harmless the Hotel
Operator and its shareholders and affiliates and their respective partners,
shareholders, directors, officers, employees and agents from and against any and
all liabilities relating to the operation of the Resort except for the gross
negligence or willful misconduct of its executive employees.

GOLDEN DOOR'r' SPA

The Hotel Operator has determined that each Grand Bay hotel will contain a
Golden Door'r' spa. A Golden Door'r' spa was opened at the Resort in December
1998. The spa will be marketed as an amenity to Las Casitas Village but will
also be available to all guests of the Resort. El Conquistador owns the spa and
the Hotel Operator manages and markets the spa. The cost of construction of the
spa was approximately $4.7 million, which cost was borne by El Conquistador. El
Conquistador will pay Grand Bay a management fee of 6% of the gross revenues of
the spa and an incentive fee of 25% of the operating income of the spa.

LAS CASITAS VILLAGE ARRANGEMENTS

El Conquistador has entered into separate, year-to-year agreements with the
owners of almost all of the condominium units of Las Casitas Village with
respect to the management and marketing of the condominium units. El
Conquistador has full discretion in fixing room rates for each unit in Las
Casitas Village. Each unit must be made available to El Conquistador for at
least 11 months per calendar year and 23 of 25 weeks during the Resort's high
season. El Conquistador receives 50% of the net rental income of each
condominium unit, which is equal to the gross rental income of each condominium
unit less certain administrative, marketing, maintenance, operational and other
costs associated with the condominium units individually and Las Casitas Village
as a whole. During the 9-month period ended September 30, 1998 and the fiscal
year (9 months) ended December 31, 1997, El Conquistador's net revenue from the
operation of Las Casitas Village was approximately $1,663,000 and $1,409,000,
respectively. None of the unit owners is an affiliate of El Conquistador. We
cannot promise that the arrangements with each individual unit owner will be
renewed in the future. However, El Conquistador believes that the condominium
units will continue to generally be made available to it based on the tax
incentives available to the owners of such units from such arrangements.

FURTHER DEVELOPMENT OF LAS CASITAS VILLAGE

Immediately prior to the issuance of the bonds, El Conquistador will make a
distribution of approximately 15 acres of vacant land located within its main
parcel and adjacent to Las Casitas Village to a newly formed affiliated entity.
As part of the restructuring for this offering, the common stock of the new
entity will be issued to WHG El Con Corp. and Conquistador Holding, Inc. It is
contemplated that this land will be developed for an expansion of Las Casitas
Village. El Conquistador anticipates entering into management and marketing
arrangements with the owners of the new development similar to the arrangements
with the owners of Las Casitas Village.

AVAILABLE INFORMATION

El Conquistador has filed a registration statement on Form S-11 under the
Securities Act of 1933 with the SEC with respect to this offering of the
undivided interests in the loan agreement between AFICA and El Conquistador
relating to the bonds. This official statement and prospectus does not contain
all of the information set forth in the registration statement and the exhibits
and schedules thereto, certain parts of which have been omitted in accordance
with the rules and regulations of the SEC. Reference is hereby made to the
registration statement, including the

exhibits and schedules thereto, for further information with respect to the
bonds. Summaries and other statements contained herein concerning the provisions
of any document are not necessarily complete, and in each instance reference is
hereby made to the copy of the document included in this official statement and
prospectus or filed as an exhibit to the registration statement.

The registration statement and the exhibits and schedules thereto can be
inspected and copied at the public reference facilities maintained by the SEC in
Washington, DC, Chicago, IL and New York, NY. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Such
material may also be accessed electronically by means of the SEC's home page on
the Internet at http://www.sec.gov.

Following consummation of this offering, El Conquistador will be subject to
the informational reporting requirements of the Securities Exchange Act of 1934
during the current fiscal year by reason of the public offering and the issuance
of the bonds. In accordance with the Exchange Act, El Conquistador will file
with the SEC the reports and other information required to be filed under the
Exchange Act. El Conquistador anticipates, however, that it will not be subject
to the reporting requirements of the Exchange Act in future fiscal years
pursuant to Section 15(d) of the Exchange Act; however, El Conquistador will
continue to file copies of its annual reports and certain other information,
documents and reports specified in Rule 15c2-12 promulgated under the Exchange
Act so long as the bonds are outstanding.

EL CONQUISTADOR PARTNERSHIP L.P.

El Conquistador is a Delaware limited partnership organized on January 16,
1990 under the Delaware Revised Uniform Limited Partnership Act. Immediately
prior to this offering, El Conquistador will change its name to El Conquistador
Partnership L.P., S.E. El Conquistador has elected special partnership treatment
under the laws of Puerto Rico. El Conquistador's mailing address in Puerto Rico
is 1000 El Conquistador Avenue, Fajardo, Puerto Rico 00738. El Conquistador
registered office in the State of Delaware is c/o Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801.

The general partners and limited partners of El Conquistador are WKA El Con
Associates, a New York general partnership, and Conquistador Holding, Inc., a
Delaware corporation. Each of WKA El Con and Conquistador Holding owns a 35%
limited partnership interest and a 15% general partnership interest in El
Conquistador. Conquistador Holding is the managing general partner of El
Conquistador with the authority to make all decisions on behalf of El
Conquistador without the consent of WKA El Con. As of the date of issuance of
the bonds, El Conquistador will be governed by an amended and restated agreement
of limited partnership.

Immediately prior to the issuance of the bonds:

(1) WKA El Con will be dissolved;

(2) WKA El Con's general partnership interest in El Conquistador will be
distributed to Conquistador Holding;

(3)a portion of WKA El Con's limited partnership interests in El
Conquistador representing 11.73% of all such interests will be
distributed to Conquistador Holding;

(4) WKA El Con's limited partnership interests in El Conquistador
representing 23.27% of all such interests will be distributed to WHG El
Con Corp.;

(5) Conquistador Holding will transfer its general and limited partnership
interests in El Conquistador to Conquistador Holding (SPE), Inc., its
newly-formed, wholly-owned, single-purpose subsidiary; and

(6) Conquistador Holding (SPE) will become the managing general partner of
El Conquistador at the time of the transfer referred to in (5) above.

After the restructuring discussed above:

WHG El Con Corp. will own a 23.27% limited partnership interest in El
Conquistador

Conquistador Holding (SPE) will own a 46.73% limited partnership interest
in El Conquistador

Conquistador Holding (SPE) will own a 30% general partnership interest in
El Conquistador

Conquistador Holding (SPE) will be the sole general partner and managing
general partner of El Conquistador

The term of El Conquistador will continue until March 31, 2030, provided
that El Conquistador may be dissolved prior to such date upon (1) mutual
agreement of all the partners of El Conquistador; (2) the sale or abandonment of
all or substantially all of the Resort (excluding Las Casitas Village); or (3)
the bankruptcy of the sole remaining general partner unless the remaining
partners agree in writing to continue the business of El Conquistador and to
replace the bankrupt general partner.

No regular meetings of the partners of El Conquistador are required under
the El Conquistador partnership agreement. However, the partners meet once per
year to review and approve the forthcoming year's budget for the Resort as
prepared and presented by the Hotel Operator. The partners also meet from
time-to-time as required to discuss various matters pertaining to El
Conquistador.

In 1990, WHG Resorts & Casinos Inc., together with certain other
individuals, caused the formation of WKA El Con. El Conquistador was formed by
WKA El Con and Kumagai Caribbean, Inc., a subsidiary of Kumagai Gumi Co., Ltd.,
a large Japanese construction company, for the purpose of acquiring and
renovating the hotel and casino property now known as the Resort. El
Conquistador was originally owned 50% by WKA El Con and 50% by Kumagai
Caribbean. The Resort was originally built as a 388 room hotel in 1962. In
January 1990, Williams Hospitality entered into an agreement with El
Conquistador for the management of the Resort. The Resort was substantially
renovated and expanded during 1991 and 1992 with Kumagai Caribbean acting as
construction manager and rendering technical development services during the
construction phase and Williams Hospitality rendering management services in
preparation of opening of the Resort. The completed Resort, excluding Las
Casitas Village, opened for business in November 1993.

In April 1993, WKA El Con became a limited partner in Las Casitas
Development Company I, S en C (S.E.) which acquired certain land from El
Conquistador for the purpose of developing and selling approximately 90
condominiums known as Las Casitas Village. The project was substantially
completed in or about January 1995. Las Casitas Development is an affiliate of
El Conquistador. However, Las Casitas Development currently conducts no business
and it will not conduct any further business in the future.

On January 16, 1998, WHG Resorts & Casinos Inc. was acquired by a
wholly-owned subsidiary of Wyndham International. Williams Hospitality was owned
by WHG Resorts and the certain other individuals. Wyndham International acquired
WHG Resort's interest in Williams Hospitality concurrently with its acquisition
of WHG Resorts. Wyndham International is an operating company which manages and
operates hotels.

On March 31, 1998, Patriot acquired the interests of certain of the other
individual owners in WKA El Con and Kumagai Caribbean in El Conquistador and
Wyndham International acquired the remaining interests in Williams Hospitality.
Patriot is a real estate investment trust which owns hotel properties. On July
13, 1998, Patriot acquired the balance of the other individual owner's interests
in WKA El Con. Subsequently, Patriot transferred its ownership interest in WKA
El Con and El Conquistador to Conquistador Holding. WKA El Con is currently
beneficially owned 46.54% by Wyndham International and 53.46% by Conquistador
Holding. Patriot beneficially owns approximately 77% of El Conquistador by
reason of its 99% equity ownership interest in Conquistador Holding. Wyndham
International beneficially owns approximately 23% of El Conquistador by reason
of its equity ownership in WKA El Con.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

El Conquistador's partnership interests are comprised of 30% general
partnership interests and 70% limited partnership interests. The beneficial
ownership of El Conquistador as of December 15, 1998 is set forth below:

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------- ---------------------------------------- ----------------
<S> <C> <C>
WKA El Con Associates 50.00% General Partnership Interest (1) 50.00%
1000 El Conquistador Avenue
Fajardo, PR 00738
Conquistador Holding, Inc. 76.73% General Partnership Interest (2) 76.73%
1000 El Conquistador Avenue
Fajardo, PR 00738
WKA El Con Associates 50.00% Limited Partnership Interest (3) 50.00%
1000 El Conquistador Avenue
Fajardo, PR 00738
Conquistador Holding, Inc. 76.73% Limited Partnership Interest (4) 76.73%
1000 El Conquistador Avenue
Fajardo, PR 00738
</TABLE>

- ------------

(1) WKA El Con directly owns 50% of the general partnership interests of El
Conquistador which is equal to 15% of the total partnership interests of El
Conquistador. WKA El Con is 46.54% indirectly owned by Wyndham International
and 53.46% owned by Conquistador Holding.

(2) Conquistador Holding directly owns 50% of the general partnership interests
of El Conquistador and indirectly owns 26.73% of the general partnership
interests of El Conquistador by reason of its 53.46% ownership of WKA El
Con, resulting in direct and indirect ownership of 76.73% of the general
partnership interests in El Conquistador which is equal to 23.02% of the
total partnership interests of El Conquistador. Wyndham International
Operating Partnership, L.P. owns 100% of the Class A voting stock of
Conquistador Holding, which represents 1% of the equity of Conquistador
Holding, and Patriot owns 100% of the Class B non-voting stock of
Conquistador Holding, which represents 99% of the equity of Conquistador
Holding.

(3) WKA El Con directly owns 50% of the limited partnership interests of El
Conquistador which is equal to 35% of the total partnership interests of El
Conquistador.

(4) Conquistador Holding directly owns 50% of the limited partnership interests
of El Conquistador and indirectly owns 26.73% of the limited partnership
interests of El Conquistador by reason of its 53.46% ownership of WKA El
Con, resulting in direct and indirect ownership of 76.73% of the limited
partnership interests in El Conquistador which is equal to 53.71% of the
total partnership interests of El Conquistador.

------------------------

Patriot/Wyndham owns substantially all of El Conquistador by reason of its
beneficial ownership of WKA El Con and Conquistador Holding. Patriot
beneficially owns approximately 77% of El Conquistador. Wyndham International
owns approximately 23% of El Conquistador.

As of the date of this official statement and prospectus, the ownership
structure of El Conquistador is as follows:

[CHART BREAKDOWN BY PERCENTAGE OF OWNERSHIP]

Prior to consummation of this offering, the partners will enter into an
amended and restated partnership agreement which will:

(1) restrict El Conquistador's activities to the ownership of the Resort
(excluding Las Casitas Village) and the operation of the Resort;

(2) prohibit El Conquistador from acquiring any other property which will
not become part of the Resort;

(3) prohibit the incurrence of obligations not related to the Resort; and

(4) limit El Conquistador's ability to file bankruptcy.

Conquistador Holding (SPE), Inc., the newly-formed, single-purpose entity
which will become the sole general partner of El Conquistador immediately prior
to consummation of this offering, will be similarly restricted. Additionally,
Conquistador Holding (SPE), Inc. will be required to have two independent
directors whose approval will be required for it or El Conquistador to file
bankruptcy.

The outstanding shares of common stock of Patriot are 'paired' with the
outstanding shares of common stock of Wyndham International so that they are
transferable and tradable only in combination as units, each unit consisting of
one share of Patriot common stock and one share of Wyndham International common
stock.

Patriot, through its wholly-owned subsidiaries PAH GP, Inc. and PAH LP,
Inc., is the sole general partner of Patriot American Hospitality Partnership,
L.P. In addition, Patriot is the holder of a 90.3% economic interest in the
Patriot Partnership as of September 22, 1998. The Patriot Partnership was formed
in connection with the initial public offering on October 2, 1995 of

Patriot's predecessor. Patriot's predecessor contributed its assets to the
Patriot Partnership in exchange for units of limited Patriot Partnership
interests ('OP Units') of the Patriot Partnership.

Wyndham International was the holder of an 89.1% economic interest in
Wyndham Hospitality Operating Partnership, L.P. (formerly known as Patriot
American Hospitality Operating Partnership, L.P.) as of September 22, 1998.

As of November 30, 1998, there were outstanding: 191,617,186 paired shares
of Patriot/Wyndham common stock; 4,860,876 shares of Preferred Stock of Patriot;
1,781,173 shares of Series A Preferred Stock of Wyndham International; 1,781,181
shares of Series B Preferred Stock of Wyndham International; 12,537,193 Paired
OP Units (excluding OP Units held by subsidiaries of Patriot) 1,109,186
Preferred Series A Wyndham OP Units; 1,324,804 Preferred Series B Wyndham OP
Units; and 633,545 Preferred Series C Wyndham OP Units.

The beneficial ownership of the executive officers of El Conquistador in
paired shares of Patriot/Wyndham as of November 30, 1998 is set forth below:

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------------------------------------------------ ---------------------- --------
<S> <C> <C>
Karim Alibhai ................................................................ 4,787,938(1) 2.44%
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
James D. Carreker ............................................................ 1,890,063(2) *
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
Stanley M. Koonce, Jr. ....................................................... 540,500(3) *
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
William W. Evans, III ........................................................ 488,225(4) *
590 Madison Avenue, New York, NY 10022
Thomas W. Lattin ............................................................. 287,432(5) *
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
Lawrence S. Jones ............................................................ 30,000(6) *
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
Carla S. Moreland ............................................................ 13,128(7) *
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
Brian R. Gamache ............................................................. 32,803(8) *
1950 Stemmons Freeway, Suite 6001, Dallas, TX 75207
</TABLE>

- ------------

* Less than 1%.

(1) Includes options to purchase 280,000 paired shares of Patriot/Wyndham issued
to Mr. Alibhai, of which 93,333 options are currently exercisable. The
number of shares beneficially held by Mr. Alibhai includes 633,545 shares of
Preferred Series C Wyndham OP Units, 85,600 shares of Series A Preferred
Stock of Wyndham International (beneficially owned by CHC Investor Partners,
Ltd.), 85,600 shares of Series B Preferred Stock of Wyndham International
(beneficially owned by CHC Investor Partners, Ltd.) and an aggregate of
421,161 OP Units (beneficially owned by Gencom Interests, Inc., a family
corporation for which he serves as Vice President and of which he owns 30%
of the outstanding capital stock). Mr. Alibhai disclaims beneficial
ownership of the OP Units referred to above, except to the extent of his 30%
ownership interest in such corporation. Mr. Alibhai also disclaims
beneficial ownership of the Series A Preferred Stock of Wyndham
International and the Series B Preferred Stock of Wyndham International's
referred to above to the extent they exceed his pecuniary interest in CHC
Investor Partners, Ltd.

(2) Includes options to purchase 72,716 paired shares of Patriot/Wyndham issued
to Mr. Carreker, all of which are currently exercisable.

(3) Includes options to purchase 17,022 paired shares of Patriot/Wyndham issued
to Mr. Koonce, none of which are currently exercisable.

(4) Includes options to purchase 560,009 paired shares of Patriot/Wyndham issued
to Mr. Evans, of which 280,005 options are currently exercisable.

(5) Includes options to purchase 262,633 paired shares of Patriot/Wyndham issued
to Mr. Lattin, of which 116,682 options are currently exercisable.

(footnotes continued on next page)

(footnotes continued from previous page)

(6) Includes options to purchase 18,000 paired shares of Patriot/Wyndham issued
to Mr. Jones, none of which are currently exercisable.

(7) Includes options to purchase 6,692 paired shares of Patriot/Wyndham issued
to Ms. Moreland, none of which are currently exercisable.

(8) Includes options to purchase 12,351 paired shares of Patriot/Wyndham issued
to Mr. Gamache, none of which are currently exercisable.

The beneficial ownership of the stockholders that possess more than 5% of
the paired shares of Patriot/Wyndham as of November 30, 1998 is:

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------------------------------------------------------------------- -------------------- --------
<S> <C> <C>
Harlan R. Crow ...........................................................
2001 Ross Avenue, Dallas, TX 75201 11,288,220(1) 5.74%
CFHS, L.L.C. / Crow Family, Inc. ........................................
2001 Ross Avenue, Dallas, TX 75201 11,074,443(2) 5.64%
</TABLE>

- ------------

(1) The number of shares beneficially owned by Mr. Crow include an aggregate of
6,427,217 paired shares of Patriot/Wyndham held by various family limited
partnerships, in which Mr. Crow controls the general partner, and various
family corporations and trusts in which Mr. Crow exercises control over
investment decisions. Mr. Crow disclaims beneficial ownership of such paired
shares. The number of shares also includes 4,860,876 shares of preferred
stock of Patriot held by the same family limited partnerships, corporations
and trusts. Mr. Crow disclaims beneficial ownership of such preferred stock
of Patriot. Certain of such paired shares of Patriot/Wyndham and preferred
stock of Patriot are also reported as being beneficially owned by CFHS,
L.L.C. and Crow Family, Inc.

(2) Includes 6,305,569 paired shares of Patriot/Wyndham and 4,768,874 shares of
preferred stock of Patriot held by various limited partnerships in which
CFHS, L.L.C. serves as the general partner. All of such shares are also
reported in Mr. Crow's beneficial holdings. Beneficial ownership information
is based on the Schedule 13D filed by G-3 Securities, L.P., CFHS, L.L.C. and
Crow Family, Inc. on January 8, 1998.

MANAGEMENT OF EL CONQUISTADOR PARTNERSHIP L.P.

EXECUTIVE OFFICERS OF EL CONQUISTADOR

The following table sets forth the names, ages and principal occupations of
each of El Conquistador's executive officers and the year in which each was
elected an officer.

<TABLE>
<CAPTION>
NAME AGE TITLE OFFICER SINCE
- ----------------------------------------- --- ----------------------------------------- -------------
<S> <C> <C> <C>
James D. Carreker........................ 51 Chief Executive Officer 1998
Brian R. Gamache......................... 42 President 1995
Lawrence S. Jones........................ 52 Executive Vice President and Treasurer 1998
Karim Alibhai............................ 34 Executive Vice President 1998
William W. Evans, III.................... 46 Executive Vice President 1998
Stanley M. Koonce, Jr.................... 50 Executive Vice President 1998
Thomas W. Lattin......................... 54 Executive Vice President and Director 1998
Carla S. Moreland........................ 39 Secretary 1998
</TABLE>

JAMES D. CARREKER became the Chief Executive Officer of El Conquistador in
1998. Mr. Carreker also became the Chairman of the Board of Directors and Chief
Executive Officer of Wyndham International and a director of Patriot in 1998. He
has also been Chief Executive Officer and a Director of Conquistador Holding
since 1998. Prior to such time, he had served as President and Chief Executive
Officer of Wyndham Hotel Corporation, the predecessor corporation

to Wyndham. He also served as Chief Executive Officer of Trammell Crow Company,
a national real estate company, from August 1994 to December 1995. Mr. Carreker
currently serves as a director of Trammel Crow Company. Mr. Carreker is 51 years
old. Mr. Carreker holds a B.S. and a Master of Business Administration from
Oklahoma State University.

BRIAN R. GAMACHE became the President of El Conquistador and Conquistador
Holding in 1998. Mr. Gamache was President of the Resort from May 1995 until
November 1997. He was also President and Chief Operating Officer of WHG Resorts
& Casino Inc. from April 1997 until January 1998. Mr. Gamache has been President
of Williams Hospitality since March 1996 and he was Chief Operating Officer of
Williams Hospitality from March 1996 until January 1998. Prior to such time, Mr.
Gamache served as the Vice President -- Sales and Marketing of Williams
Hospitality from September 1990 until May 1995. Prior to joining Williams
Hospitality, Mr. Gamache held various positions for Hyatt Hotels Corp. from 1983
until 1990, including Corporate Director of Sales and Marketing -- Resorts from
1987 until 1990 and he held various positions at Marriott Hotels Corporation
from 1980 until 1983, including Director of Sales at the Marriott Camelback
Resort and Country Club in Scottsdale, Arizona. Mr. Gamache is 41 years old.

LAWRENCE S. JONES became the Executive Vice President and Treasurer of El
Conquistador and Conquistador Holding in 1998. Mr. Jones also became the
Executive Vice President and Treasurer of each of Patriot and Wyndham
International in 1998. Prior to such time, Mr. Jones joined Coopers & Lybrand in
1972 and continued there as a partner until March 1998 where he served as
Chairman of the firm's REIT industry practice. Mr. Jones is 51 years old. Mr.
Jones holds a B.S. from the University of California, Berkeley and a M.S. from
UCLA. Mr. Jones is a certified public accountant.

KARIM ALIBHAI became an Executive Vice President of El Conquistador and
Conquistador Holding in 1998. Mr. Alibhai has been the President and the Chief
Operating Officer and a director of Wyndham International since 1997. For the
prior 11 years, Mr. Alibhai was a principal of the Gencom Group, an affiliated
group of companies that acquired, developed, renovated, leased and managed hotel
properties in the United States and Canada through Gencom American Hospitality.
Most recently, Mr. Alibhai was the President and Chief Executive Officer of the
Gencom Group. Mr. Alibhai is 34 years old. He holds a B.A. from Rice University.

WILLIAM W. EVANS, III became an Executive Vice President of El Conquistador
and Conquistador Holding in 1998. Mr. Evans also serves as Executive Vice
President of Wyndham International and President and Chief Operating Officer of
Patriot since 1998 and as a director of Patriot since 1997. Prior to such time,
Mr. Evans served in the Office of the Chairman of Patriot or its predecessor
since 1997. Previously, Mr. Evans was a Managing Director in PaineWebber's Real
Estate Group with responsibility principally for the organization and
structuring of principal transactions. He joined PaineWebber as a result of the
firm's acquisition of Kidder, Peabody and Co. Incorporated in December 1994. Mr.
Evans is 46 years old. Mr. Evans is a graduate of the University of Virginia.

STANLEY M. KOONCE, JR. became an Executive Vice President of El
Conquistador and Conquistador Holding in 1998. Mr. Koonce also has been the
Executive Vice President -- Marketing and Strategic Planning of Wyndham
International since 1998. Prior to such time, he served as Executive Vice
President -- Marketing, Planning and Technical Services of Old Wyndham since
October 1994, was elected a director of Wyndham Hotel Corp. in January 1997 and
served as Senior Vice President of Sales and Marketing of Wyndham Hotel Corp.
from October 1989 until October 1994. Mr. Koonce is 50 years old. Mr. Koonce
holds a B.S. in Mathematics and an M.B.A. from the University of North Carolina.

THOMAS W. LATTIN became an Executive Vice President of El Conquistador and
Executive Vice President and a Director of Conquistador Holding in 1998. Mr.
Lattin also has been an Executive Vice President of Wyndham International since
October 1997. Prior to such time, he became President of Chief Operating Officer
of the predecessor of Patriot in April 1995 and continues in such capacity for
Patriot. From 1987 through 1994, he served as the National Partner of the
hospitality industry consulting practice of Leventhal & Horwath and subsequently
as a partner in the national hospitality consulting group of Coopers & Lybrand
L.L.P. In 1994, he

joined the Hospitality Group of Kidder, Peabody & Co. Incorporated as a Senior
Vice President and later served as a Senior Vice President with PaineWebber
Incorporated. Mr. Lattin is 54 years old. Mr. Lattin holds a B.S. and a M.S.
in Hotel Management from the Cornell School of Hotel Administration. He is a
certified public accountant.

CARLA S. MORELAND became Secretary of El Conquistador and Senior Vice
President and Secretary of Conquistador Holding in 1998. Ms. Moreland also has
been Senior Vice President, General Counsel and Secretary of Wyndham
International since 1998. Ms. Moreland was Vice President, General Counsel and
Secretary of Wyndham Hotel Corp. from 1994 until 1998. From 1988 until 1994 Ms.
Moreland was an attorney at Weil Gotshal & Manges. Ms. Moreland is 39 years old.

OFFICERS AND DIRECTORS OF THE MANAGING GENERAL PARTNER

Certain information is set forth below concerning the directors and
principal executive officers of Conquistador Holding, each of whom has been
elected or appointed to serve until his or her successor is duly elected and
qualified.

<TABLE>
<CAPTION>
POSITION(S)
NAME AGE POSITION(S) HELD SINCE
- ---------------------------------------------- --- ---------------------------------------------- ----------
<S> <C> <C> <C>
James D. Carreker............................. 51 Chief Executive Officer and Director 1998
Brian R. Gamache.............................. 42 President 1998
Lawrence S. Jones............................. 52 Executive Vice President and Treasurer 1998
Karim Alibhai................................. 34 Executive Vice President 1998
William W. Evans, III......................... 46 Executive Vice President 1998
Stanley M. Koonce, Jr......................... 50 Executive Vice President 1998
Thomas W. Lattin.............................. 54 Executive Vice President and Director 1998
Carla S. Moreland............................. 39 Senior Vice President and Secretary 1998
</TABLE>

For biographical information with respect to the individuals listed above,
see ' -- Executive Officers of El Conquistador' above. The individuals set forth
above will also serve as the directors and principal executive officers of
Conquistador Holding (SPE), Inc. at the time of this offering.

Conquistador Holding (SPE), Inc. intends to designate two additional
directors after completion of this offering. The individuals who will serve as
the two additional directors will not become executive officers of El
Conquistador or Conquistador Holding (SPE), Inc. As of the date of this official
statement and prospectus, it has not been determined who will serve as the
additional directors.

COMPENSATION OF EXECUTIVE OFFICERS OF EL CONQUISTADOR

The executive officers of El Conquistador received no compensation from the
partnership during the fiscal year (9 months) ended December 31, 1997 or the
fiscal years ended March 31, 1997 or 1996.

LIMITATIONS ON THE LIABILITY OF AFFILIATED PERSONS

Section 17-403 of the Delaware Revised Uniform Limited Partnership Act
provides that unless modified by the partnership agreement, a general partner of
a limited partnership owes a fiduciary duty and will be liable for a breach of
such duty to the partnership and to other partners of the partnership. However,
the new partnership agreement of El Conquistador will provide that no general
partner and none of its officers, directors, partners, employees or agents,
whether acting as a general partner or otherwise, will have any liability to El
Conquistador or any other partner for any acts performed by such general
partner, officer, director, partner, employee or agent, by or on behalf of El
Conquistador in its capacity as such except for gross negligence or willful
misconduct. The new partnership agreement will also provide that the liability
of each limited partner is limited to its capital contribution and that no
limited partner as such has any other liability to contribute money to, or in
respect of the liabilities or obligations of, El Conquistador, nor is any
limited partner as such personally liable for any obligations of El Conquistador
except as otherwise

provided by law. IN THE OPINION OF THE SEC, INDEMNIFICATION FOR LIABILITIES
ARISING UNDER THE SECURITIES ACT OF 1993 IS AGAINST PUBLIC POLICY AND
THEREFORE UNENFORCEABLE.

A successful indemnification of the general partner or an affiliate could
deplete the assets of El Conquistador, unless El Conquistador's indemnification
obligation is covered by insurance. El Conquistador does not anticipate
obtaining such insurance.

The new management agreement will provide that El Conquistador will
indemnify and hold harmless Williams Hospitality and its shareholders and
affiliates and their respective partners, shareholders, directors, officers,
employees and agents from and against any and all liabilities (including those
caused by the simple negligence of the indemnitee and those as to which the
indemnitee may be strictly liable) (1) arising out of or incurred in connection
with the construction, renovation, management or operation of the Resort or (2)
arising out of or resulting from the environmental condition of the Resort or
the applicability of any legal requirements relating to hazardous materials,
except, in the case of both (1) and (2) above, those liabilities caused by the
gross negligence or willful misconduct of executive personnel.

SELECTED FINANCIAL DATA

The following table sets forth selected income data and balance sheet data
of El Conquistador. The selected income data and balance sheet data are derived
from the financial statements of El Conquistador for the fiscal year (9 months)
ended December 31, 1997 and the fiscal years ended March 31, 1994, 1995, 1996
and 1997, which have been audited by Ernst & Young LLP, independent auditors.
The financial statements and notes thereto as of December 31, 1997 and March 31,
1997 and for each of the three fiscal years ended December 31, 1997 are included
in this official statement and prospectus, and include an explanatory paragraph
which describes an uncertainty about El Conquistador's ability to continue as a
going-concern. The information set forth below for other periods is unaudited.
The pro forma operating information set forth below assumes that the offering
and related transactions, including (1) repayment of the interim loan made by
Citicorp Real Estate and (2) the effective date of the new management agreement
occurred on April 1, 1997. The pro forma balance sheet assumes such transactions
had occurred as of the respective balance sheet dates. The financial data for
the twelve months ended March 31, 1998 (historical and pro forma), nine months
ended December 31, 1997 (pro forma) and nine months ended September 30, 1998
(historical and pro forma) are under a new basis as a result of the acquisition
of El Conquistador by Patriot/Wyndham. El Conquistador changed its fiscal
year-end to December 31 from March 31 effective for the fiscal year ended
December 31, 1997. The data below should be read in conjunction with the
financial statements, related notes and other financial information included
herein.

<TABLE>
<CAPTION>
TWELVE MONTHS
TWELVE MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, ENDED MARCH 31,
------------------------------------------ MARCH 31, 1998
1994 1995 1996 1997 1998 PRO FORMA
-------- -------- --------- -------- ------------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT ROOM AND OCCUPANCY DATA)
<S> <C> <C> <C> <C> <C> <C>
Selected Statement of Income Data:
Revenues:
Rooms............................. $ 16,873 $ 37,943 $ 38,817 $ 40,025 $ 41,354 $ 41,354
Food and beverage................. 9,421 27,298 26,189 26,235 27,020 27,020
Casino............................ 2,488 6,055 6,179 6,005 4,931 4,931
Other income...................... 4,344 14,652 19,166 21,959 24,416 24,416
-------- -------- --------- -------- ------------- -------------
33,126 85,948 90,351 94,224 97,721 97,721
Less casino promotional
allowance....................... (152) (1,205) (1,137) (1,266) (674) (674)
-------- -------- --------- -------- ------------- -------------
Total revenues.................. $ 32,974 $ 84,743 $ 89,214 $ 92,958 $ 97,047 $ 97,047
-------- -------- --------- -------- ------------- -------------
-------- -------- --------- -------- ------------- -------------
Operating expenses before
depreciation and amortization..... $ 33,559 $ 85,427 $ 74,163 $ 76,251 $ 78,706 $ 75,192
-------- -------- --------- -------- ------------- -------------
Depreciation and amortization....... 4,274 11,124 10,499 9,147 9,221 5,879(1)
-------- -------- --------- -------- ------------- -------------
Income (loss) from operations
(EBIT)............................ (4,859) (11,808) 4,552 7,560 9,120 15,976
Interest income..................... 109 468 229 199 173 173
Interest expense.................... (5,298) (16,137) (17,022) (17,162) (17,229) (10,750)(2)
-------- -------- --------- -------- ------------- -------------
Net income (loss)............... $(10,048) $(27,477) $ (12,241) $ (9,403) $ (7,936) $ 5,399
-------- -------- --------- -------- ------------- -------------
-------- -------- --------- -------- ------------- -------------
(Deficiency in) partners' capital
beginning of period............... $ 46,189 $ 36,191 $ 8,716 $ (3,525) $ (12,928) $ (12,928)
Partner capital contributions....... 50 2 -- -- 81,923 85,575
(Deficiency in) partners' capital
end of period..................... 36,191 8,716 (3,525) (12,928) 61,059 78,046
Ratio of earnings to fixed
charges........................... (9,861) (27,241) (12,004) (9,166) (7,699) 1.5X
Ratio of EBITDA to fixed charges.... 0.8X 0.9X 1.0X 2.0X
Other Financial Data:
Available rooms(#)(3)............... 751 751 751 751 751 751
Occupancy(3)........................ 72.1% 73.3% 71.0% 72.0% 72.7% 72.7%
Average rate(3)..................... $ 220.99 $ 188.87 $ 198.99 $ 202.86 $ 207.56 $ 207.56
RevPAR(3)(4)........................ $ 159.37 $ 138.42 $ 141.22 $ 146.01 $ 150.87 $ 150.87
Room revenue per available
room(3)........................... NA $112,840 $ 118,794 $123,779 $ 129,224 $ 129,224
Cash flow from operating
activities........................ $ 2,283 $ (4,712) $ 1,906 $ 5,855 $ 4,376
EBITDA(5)........................... $ (585) $ (684) $ 15,051 $ 16,707 $ 18,341 $ 21,855
Selected Balance Sheet Data:
Current assets...................... $ 25,270 $ 15,316 $ 11,823 $ 13,618
Land, building and equipment, net... 197,139 194,557 188,994 183,960
Total assets........................ 243,587 225,191 211,691 205,430
Long-term debt, including current
maturities........................ 181,989 193,034 197,154 199,709
Total liabilities and (deficiency
in) partners' capital............. 243,587 225,191 211,691 205,430
</TABLE>

- ------------

(2) Reflects an assumed interest rate of 6.08% for the bonds.

(3) Excludes Las Casitas Village.

(4) RevPAR is equal to the average rate multiplied by occupancy percentage.

<TABLE>
<CAPTION>
NINE MONTHS
NINE MONTHS NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30,
ENDED ENDED DECEMBER 31, -----------------------------------
DECEMBER 31, DECEMBER 31, 1997 1998
1996 1997 PRO FORMA 1997 1998 PRO FORMA
------------ ------------ ------------- -------- -------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT ROOM AND OCCUPANCY DATA)
<S> <C> <C> <C> <C> <C> <C>
Selected Statement of Income Data:
Revenues:
Rooms................................... $ 24,420 $ 25,130 $ 25,130 $ 31,670 $ 32,679 $ 32,679
Food and beverage....................... 17,633 17,429 17,429 20,421 23,327 23,327
Casino.................................. 4,011 3,554 3,554 4,266 3,551 3,551
Other income............................ 12,954 14,472 14,472 18,142 20,072 20,072
------------ ------------ ------------- -------- -------- -----------
59,018 60,585 60,585 74,499 79,629 79,629
Less casino promotional allowance....... (849) (458) (458) (687) (512) (512)
------------ ------------ ------------- -------- -------- -----------
Total revenues........................ $ 58,169 $ 60,127 $ 60,127 $ 73,812 $ 79,117 $ 79,117
------------ ------------ ------------- -------- -------- -----------
------------ ------------ ------------- -------- -------- -----------
Operating expenses before depreciation and
amortization............................ $ 53,572 $ 55,253 $ 53,724 $ 58,889 $ 59,887 $ 56,617
------------ ------------ ------------- -------- -------- -----------
Depreciation and amortization............. 6,856 6,887 4,381(1) 6,922 5,670 5,224(1)
------------ ------------ ------------- -------- -------- -----------
Income (loss) from operations (EBIT)...... (2,259) (2,013) 2,022 8,001 13,560 17,276
Interest income........................... 139 128 128 150 149 149
Interest expense.......................... (12,691) (13,157) (8,063)(2) (13,231) (12,159) (8,063)(2)
Loss on early extinguishment of debt...... -- -- -- -- (1,676) --
------------ ------------ ------------- -------- -------- -----------
Net income (loss)..................... $(14,811) $(15,042) $ (5,913) $ (5,080) $ (126) $ 9,362
------------ ------------ ------------- -------- -------- -----------
------------ ------------ ------------- -------- -------- -----------
(Deficiency in) partners' capital
beginning of period..................... $ (3,525) $(12,928) $ (12,928) $(18,336) $(27,971) $ (27,971)
Partner capital contributions............. -- -- 94,851 -- 85,200 100,073
(Deficiency in) partners' capital end of
period.................................. (18,336) (27,970) 73,700 23,417 57,103 81,464
Ratio of earnings to fixed charges........ (14,633) (14,864) (5,735) (4,902) 1.0X 2.2X
Ratio of EBITDA to fixed charges.......... 0.3X 0.3X 0.8X 1.1X 1.5X 2.7X
Other Financial Data:
Available rooms(#)(3)..................... 751 751 751 751 751 751
Occupancy(3).............................. 67.6% 69.3% 69.3% 76.4% 74.5% 74.5%
Average rate(3)........................... $ 175.01 $ 175.59 $ 175.59 $ 202.16 $ 213.93 $ 213.93
RevPAR(3)(4).............................. $ 118.24 $ 121.68 $ 121.68 $ 154.47 $ 159.38 $ 159.38
Room revenue per available room(3)........ $ 77,456 $ 80,062 $ 80,062 $ 42,170 $ 43,513 $ 43,513
Cash flow from operating activities....... $ 13 $ (1,415) $ 2,828 $ 7,176
EBITDA.................................... $ 4,597 $ 4,874 $ 6,402 $ 14,923 $ 19,229 $ 22,500
Selected Balance Sheet Data:
Current assets............................ $ 12,517 $ 13,953 $ 10,637 $ 13,203 $ 21,176
Land, building and equipment.............. 185,822 181,127 181,874 232,292 232,292
Total assets.............................. 206,755 200,422 198,543 252,250 264,585
Long-term debt, including current
maturities.............................. 202,969 204,624 146,274 146,274 134,274(5)
Total liabilities and (deficiency in)
partners' capital....................... 206,755 200,422 198,543 252,250 264,585
</TABLE>

- ------------

(1) Reflects an adjustment for amortization of offering costs, estimated at $5.0
million, amortized on the straight-line method over the 30-year term of the
Bonds at a rate of $125,000 for each of the 9 months ended December 31, 1997
and 9 months ended September 30, 1998, and the effect of the acquisition of
El Conquistador by Patriot/Wyndham related to depreciation and deferred
cost amortization.

(2) Reflects an assumed interest rate of 6.08% for the bonds.

(3) Excludes Las Casitas Village.

(4) RevPAR is equal to the average rate multiplied by occupancy percentage.

(5) Reflects the reduction in long-term debt of $25,000,000 owed to the
Government Development Bank for Puerto Rico by El Conquistador, which will
be assumed by Patriot and the addition of the gross proceeds from this
offering.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

El Conquistador's results of operations are highly seasonal with the
highest revenues occurring from December through April. During the months of May
through November, efforts are made to actively market the Resort in order to
minimize the adverse effects of seasonality. Accordingly, results for any single
quarter are not necessarily indicative of the results for any other quarter or
for the full fiscal year. Results can also be negatively affected by
circumstances beyond El Conquistador's control such as hurricanes, airline
strikes, droughts and water shortages, and the like. The impact of such events,
if any, will depend, in part, upon the time of year when such events occur.

El Conquistador and the Hotel Operator have taken steps to improve the
operating performance of the Resort. El Conquistador has strengthened management
at the Resort by increased supervision of hiring practices, providing increased
benefits to employees and providing comprehensive training to new and existing
employees. El Conquistador has also reduced operating costs at the Resort
primarily through the implementation of cost controls and more efficient
staffing. Generally, such cost savings are attributable to reduced staffing
levels, food and beverage operating hours and transportation services during the
low-season months.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED) COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Hotel and casino revenues, net............................. $ 79,117 $ 73,812
Operating expenses......................................... 65,557 65,811
-------- --------
Operating income...................................... 13,560 8,001
Interest income....................................... 149 150
Interest expense...................................... (12,159) (13,231)
-------- --------
Income (loss) before extraordinary item............... 1,550 5,080
Loss from early extinguishment of debt................ (1,676) --
-------- --------
Net income (loss)................................ $ (126) $ (5,080)
-------- --------
-------- --------
</TABLE>

Hotel and casino revenues increased $5,305,000 or 7.2% in the nine months
ended September 30, 1998 to $79,117,000 from $73,812,000 in the nine months
ended September 30, 1997, notwithstanding the fact that the Resort was closed
for the last 10 days of September 1998 as a result of Hurricane Georges. El
Conquistador has estimated its loss of revenues due to the hurricane at
approximately $1,390,000. El Conquistador believes its business interruption
insurance will cover lost net income resulting from the aforementioned loss of
revenues. Revenues primarily increased due to a higher percentage of occupancy
in the group sector which generated higher average rates and additional room
revenue as well as additional banquet, food and beverage revenues. During the
period ended September 30, 1998, room prices increased an aggregate of
$1,798,876 accounting for 178.3% of the change in room revenue while the value
of rooms sold decreased an aggregate of $790,229 accounting for (78.3%) of the
change in room revenue compared to the corresponding period in 1997. Additional
revenues were also generated from transportation and golf greens fee price
increases implemented on January 1, 1998.

Operating income increased by $5,559,000 or 69.5% from $8,000,000 to
$13,560,000 for the nine months ended September 30, 1998 compared with the nine
months ended September 30, 1997. These results were achieved by the combination
of operating departments producing higher

margins on improved sales and expenses of overhead departments remaining
constant or being reduced for the period ended September 30, 1998 compared to
the corresponding period in 1997.

Income before extraordinary items for the nine months ended September 30,
1998 was $1,550,613 versus a loss of $5,080,488 for the same period in 1997.
This improvement was generated from higher revenues in the current period while
maintaining operating expense levels at the same rate as the prior year. In the
third quarter of 1998, El Conquistador expensed as an extraordinary item the
remaining $1,676,613 of deferred financing fees relating to its 1991
$120,000,000 AFICA bond transaction. The extraordinary item expense was due to
the replacement of the 1991 AFICA bonds with an interim loan in August 1998, and
represents full amortization of the property's original financing costs.
Amortization expenses decreased as the unamortized portion of the five-year
pre-opening marketing expenses amounting to approximately $1,087,000 were
eliminated in March 1998 as a result of the acquisition of control of El
Conquistador by Conquistador Holding and the resulting new basis of accounting.

The net loss for the nine month period ended September 30, 1998 decreased
by $4,954,000 to $126,000 versus $5,080,000 for the nine month period ended
September 30, 1997. This improvement is directly related to increased group
revenues, improved operating efficiencies and a $1,000,000 reduction in interest
expense associated with the buyout of certain loans made by Kumagai Caribbean to
El Conquistador together with lower capital lease interest expenses during the
current nine month period compared to the corresponding period in 1997.

FISCAL YEAR (NINE MONTHS) ENDED DECEMBER 31, 1997 COMPARED WITH NINE MONTHS
ENDED
DECEMBER 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
-------------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Hotel and casino revenues, net............................. $ 60,127 $ 58,169
Operating expenses......................................... 62,140 60,428
-------- --------
Operating income (loss)............................... (2,013) (2,259)
Interest income....................................... 128 139
Interest expense...................................... (13,157) (12,691)
-------- --------
Net income (loss)................................ $(15,042) $(14,811)
-------- --------
-------- --------
</TABLE>

Hotel and casino revenues increased by $1,958,000 or 3.4% in the nine
months ended December 31, 1997 to $60,127,000 from $58,169,000 in the nine
months ended December 31, 1996. Despite this increase, the additional travel
agent commissions paid and greater sales and marketing expenses to attract
summer business negated this revenue gain. The Resort extended additional
discounts and marketing promotional monies to stimulate demand in other markets.
During the period ended December 31, 1997, room prices increased an aggregate of
$627,417 accounting for 11.6% of the change in room revenue and the value of
rooms sold increased an aggregate of $709,872 accounting for 88.4% of the change
in room revenue compared to the corresponding period in 1996.

For the nine primarily off-season months of April 1, 1997 to December 31,
1997, operating loss was $2,013,000 as compared to a loss of $2,259,000 for
April 1, 1996 to December 31, 1996. Operating income increased $246,000
notwithstanding the slow summer convention season and higher marketing expenses
for the 9 months ended December 31, 1997 as compared to the same 9 months ended
December 31, 1996.

The net loss in the nine months ended December 31, 1997 was $15,042,000
compared to a net loss of $14,811,000 in the nine months ended December 31,
1996. The net loss increased due to increased travel agent commissions and
higher marketing expenses along with increased interest charges for the deferred
Williams Hospitality management fees and the $120,000,000 1991 AFICA bonds.

TWELVE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) COMPARED WITH FISCAL YEAR ENDED
MARCH 31, 1997

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
MARCH 31,
-------------------------
1998 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Hotel and casino revenues, net............................. $ 97,047 $ 92,958
Operating expenses......................................... 87,927 85,398
-------- --------
Operating income...................................... 9,120 7,560
Interest income....................................... 173 199
Interest expense...................................... (17,229) (17,162)
-------- --------
Net income (loss)................................ $ (7,936) $ (9,403)
-------- --------
-------- --------
</TABLE>

Hotel and casino revenues increased by $4,089,000 or 4.4% in the 12 months
ended March 31, 1998 to $97,047,000 from $92,958,000 in the fiscal year ended
March 31, 1997. This revenue growth was due to increased room nights sold,
transportation and golf price increases, and higher concession rents collected
in the 12 months ended March 31, 1998. During the period ended March 31, 1998,
room prices increased an aggregate of $937,021 accounting for 70.4% of the
change in room revenue and the value of rooms sold increased an aggregate of
$393,539 accounting for 29.6% of the change in room revenue compared to the
corresponding period in the prior year.

Operating income increased by $1,560,000 or 20.6% for the 12 months ended
March 31, 1998 to $9,120,000 from $7,560,000 in the period ended March 31, 1997.
Except for the additional expenses incurred to promote summer business through
local advertising and increasing commissions paid to travel agents, operating
expenses remained constant for the periods ended March 31, 1998 and March 31,
1997.

The net loss for the 12 month period ended March 31, 1998 totaled
$7,936,000 versus $9,403,000 for the fiscal year ended March 31, 1997. The
$1,467,000 improvement was due to the higher operating profits generated on
increased revenues over the 12 months ended March 31, 1998 as compared to the
period ended March 31, 1997.

FISCAL YEAR ENDED MARCH 31, 1997 COMPARED WITH FISCAL YEAR ENDED
MARCH 31, 1996

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Hotel and casino revenues, net............................. $ 92,958 $ 89,214
Operating expenses......................................... 85,398 84,662
-------- --------
Operating income...................................... 7,560 4,552
Interest income....................................... 199 229
Interest expense...................................... (17,162) (17,022)
-------- --------
Net income (loss)................................ $ (9,403) $(12,241)
-------- --------
-------- --------
</TABLE>

Hotel and casino revenues were $92,958,000 in the fiscal year ended March
31, 1997 compared to $89,214,000 for the fiscal year ended March 31, 1996, an
increase of $3,744,000 or 4.2%.

Combined 1997 fiscal year revenues increased by $3,744,000 or 4.2% over
fiscal 1996 as the Resort was able to pass on higher room rates as well as
increasing occupancy by 1% in fiscal 1997. In addition, transportation price
increases as well as increased concession rents contributed to the revenue
increase for fiscal 1997 over fiscal 1996. During the period ended March 31,
1997, room prices increased an aggregate of $762,195 accounting for 63.2% of the
change in room

revenue and the value of rooms sold increased an aggregate of $444,548
accounting for 36.8% of the change in room revenue compared to the corresponding
period in the prior year.

Operating income increased by $3,008,000 or 66.0% for the 12 months ended
March 31, 1997 as management continued to improve the operating efficiency and
profit margins in the rooms, food and beverage departments. Undistributed
expenses increased in sales and marketing due to increased advertising and
promotions necessary to stimulate summer demand. Depreciation and amortization
expenses declined for the period ended March 31, 1997 versus March 31, 1996 by
$1,352,000 as the 24-month pre-opening expenses became fully amortized at the
end of fiscal 1996.

Net loss for the 12 months ended March 31, 1997 was $9,403,000 compared to
a net loss of $12,241,000 for the 12 months ended March 31, 1996. This
$2,838,000 or 23.2% reduction can be attributed to increased volume and pricing
as well as the decrease in amortization in fiscal 1997 of certain pre-opening
marketing expenses.

FINANCIAL CONDITION

The Resort's cash needs during the high-season months of December through
April are provided from cash generated at the Resort. The Resort's cash needs
during the off-season months of May through November have historically been
provided from cash generated at the Resort and by the Hotel Operator, and from a
revolving credit facility. The revolving credit facility was terminated in May
1998. Additionally, during the fiscal year ending December 31, 1998, a portion
of the Resort's cash needs were funded from short-term borrowings from Patriot.
Such borrowings are payable on demand and interest accrues at a rate of 8.00%
per annum. Such borrowings were necessary to fund a portion of the interest and
real property tax reserves and certain costs and expenses related to the
extension of the $90,000,000 interim loan provided by Citicorp Real Estate. El
Conquistador believes that after completion of this offering its cash needs
throughout the year will be provided by cash generated at the Resort.

At September 30, 1998, total short-term and long-term indebtedness of El
Conquistador was approximately $175,497,353 consisting of the following:

$90,000,000 interim loan provided by Citicorp Real Estate which is due
January 29, 1999;

$32,453,458 owed to Posadas de Puerto Rico Associates, Incorporated, an
affiliate of El Conquistador and the Hotel Operator;

$25,000,000 owed to the Government Development Bank for Puerto Rico;

$167,585 of equipment financing debt;

$15,510,970 of loans and accrued interest owed to the partners of El
Conquistador;

$8,794,194 of incentive management fees owed to Williams Hospitality;

$1,112,820 of interest on the incentive management fees owed to Williams
Hospitality; and

$2,458,326 of loans and accrued interest owed to Williams Hospitality.

The first mortgage lien in the amount of $90,000,000 in favor of Citicorp
Real Estate requires monthly payments of interest and matures January 29, 1999,
unless extended or refinanced. The obligation is non-recourse to the partners of
El Conquistador payable solely from assets of the partnership. Patriot has
guaranteed up to $22,500,000 of the amount owed to Citicorp Real Estate. The
$90,000,000 indebtedness will be repaid in full with the proceeds from this
offering.

The second mortgage lien on the El Conquistador is in the principal amount
of $25,000,000 in favor of the Government Development Bank for Puerto Rico. The
loan is non-recourse to the partners of El Conquistador and is the subject of a
subordination and standstill agreement with Citicorp Real Estate, the holder of
the first mortgage lien. The $25,000,000 loan becomes due in February 2006. The
$25,000,000 indebtedness will be assumed by Patriot in a transaction which is
subject to completion of this offering. El Conquistador will have no further
obligation with respect to this indebtedness upon its assumption by Patriot.

On August 3, 1998, El Conquistador borrowed $32,021,172 from Posadas de
Puerto Rico Associates, Incorporated, the proceeds of which were used, together
with the $90,000,000 advance from Citicorp Real Estate, to repay the
$120,000,000 1991 AFICA bonds. As of September 30, 1998, the amount of such
indebtedness together with accrued interest totaled $32,453,458. The loan is
payable on demand but is subordinate in all respects to El Conquistador's
obligations to Citicorp Real Estate with respect to the $90,000,000 advance.
This loan will be subordinate to the bonds.

All the amounts owed to the partners of El Conquistador and to Williams
Hospitality will be subordinate to the bonds.

Upon completion of this offering, El Conquistador believes that cash flow
from operations of the Resort will be adequate to pay its long-term obligations
with respect to the bonds as they become due.

Annual capital expenditures are provided for each year as part of the
Resort's annual budgeting process. Capital expenditures are incurred taking into
account available cash and available financing, if necessary. The loan agreement
will permit El Conquistador to borrow funds for capital expenditures subject to
satisfaction of certain conditions. For a complete description of the covenants
in the loan agreement with respect to additional indebtedness, see 'Summary of
the Loan Agreement -- Covenants.'

The new management agreement will provide for reduced fees on an overall
basis as compared to the existing management agreement which will be in effect
through December 31, 1998. The base fee will be reduced by 1.5%, from 3.5% to
2.0%, of gross revenue of the Resort. There will be a new trade name fee of 0.5%
of gross revenue of the Resort (excluding Las Casitas Village). The incentive
fee of 10.0% of the Resort's gross operating profit will be eliminated. Although
there will be a new marketing fee of 1.5% of gross room revenues of the Resort
(excluding Las Casitas Village) as well as 1.0% of gross room revenues of Las
Casitas Village, El Conquistador believes that such fee will not increase the
overall marketing expense of the Resort. Prior to the effective date of the new
marketing arrangements, El Conquistador incurred marketing expenses internally
at approximately the same rate as contemplated under the new management
agreement. As the marketing function will now be outsourced to Wyndham
Management and Grand Bay, through their arrangements with Williams Hospitality,
El Conquistador believes that the Resort's future marketing costs will be
substantially the same as its historical marketing expenses.

12 Months Ended March 31, 1998 (unaudited) Compared With the Fiscal Year
Ended March 31, 1997. Cash flows from the operating, investing and financing
activities of the property for the 12 months ended March 31, 1998 resulted in
net cash used of $724,000 compared with net cash provided of $1,523,000 for the
fiscal year ended March 31, 1997.

Cash provided by operating activities was $4,376,000 for the 12 months
ended March 31, 1998 versus $5,855,000 for the fiscal year ended Mach 31, 1997.
This decline was due to higher accounts receivable and an increase in prepaid
expenses associated with a short-term loan extension.

Cash used by investing activities was $2,553,000 for the 12 months ended
March 31, 1998 versus $1,428,000 for March 31, 1997. Cash used for the purchase
of property and equipment was $2,486,000 in the 12 months ended March 31, 1998
versus $1,306,000 in 1997. Cash used for the purchase of operating equipment was
$68,000 in the 12 months ended March 31, 1998 versus $123,000 in fiscal 1997.

Cash used by financing activities during the 12 months ended March 31, 1998
was $2,546,000 compared with $2,903,000 for the period ended March 31, 1997.
Cash used for payment of long term chattel mortgages and capital lease
obligations totaled $3,046,000 versus $2,429,000 in comparing the periods ending
March 31, 1998 and 1997, respectively. Net cash proceeds provided from bank
notes for the 12 months ended March 31, 1998 totaled $500,000 versus $1,273,000
net cash used in the 12 months ended March 31, 1997.

Fiscal Year (Nine Months) Ended December 31, 1997 Compared With Nine Months
Ended December 31, 1996 (unaudited). Cash flows from the operating, investing
and financing activities of

the property for the nine months ended December 31, 1997 resulted in net cash
used of $1,252,000 compared with net cash provided of $191,000 for the nine
months ended December 31, 1996.

Cash used by operating activities was $1,415,000 for the nine months ended
December 31, 1997 as compared to $13,000 provided by operations during the nine
months ended December 31, 1996. The increase of cash used was due to accounts
receivable and prepaid expense increases along with the reduction of balances
due to affiliates.

Cash used by investing activities was $1,890,000 for the nine months ended
December 31, 1997 versus $1,623,000 for the period ended December 31, 1996. Cash
used for the purchase of property and equipment was $1,994,000 in the nine
months ended December 31, 1997 versus $1,625,000 for the nine months ended
December 31, 1996. Cash provided in the reduction of operating equipment was
$104,000 in the nine month ended December 31, 1997 versus $2,000 in the nine
month period ended December 31, 1996.

Cash provided by financing activities during the nine months ended December
31, 1997 was $2,053,000 versus $1,802,000 for the period ended December 31,
1996. Cash used for the payment of long term chattel mortgages and capital lease
obligations totaled $2,447,000 and $1,698,000 in the periods ended December 31,
1997 and December 31, 1996, respectively. Net cash proceeds provided from bank
notes totaled $4,500,000 in the nine month period ended December 31, 1997
compared to $3,500,000 for the nine month period ended December 31, 1996.

Nine Months Ended September 30, 1998 (unaudited) Compared With Nine Months
Ended September 30, 1997 (unaudited). Cash flows from the operating, investing
and financing activities of the property for the nine months ended September 30,
1998 resulted in net cash used of $233,000 compared with net cash used of
$317,000 for the nine months ended September 30, 1997.

Cash provided by operating activities was $7,176,000 for the nine months
ended September 30, 1998 compared to $2,828,000 in the nine months ended
September 30, 1997. The increase was primarily due to the improvement in net
income of $4,954,000 in the nine months ended September 30, 1998.

Cash used by investing activities was $5,992,000 for the nine months ended
September 30, 1998 versus $865,000 for the same period in 1997. Cash used for
the purchase of property and equipment, including for major renovations realted
to the Golden Door'r' Spa, was $5,983,000 in the first nine months of 1998
versus $869,000 in the first nine months of 1997. Cash used for the purchase of
operating equipment was $10,000 in the first nine months of 1998 compared to
$4,000 of cash provided during the same period in 1997.

Cash used by financing activities during the nine months ended September
30, 1998 totaled $1,416,000 versus $2,279,000 during the corresponding period
ended September 30, 1997. During the nine months ended September 30, 1998, El
Conquistador (1) borrowed $32,021,172 from Posadas de Puerto Rico, (2) borrowed
$90,000,000 from Citicorp Real Estate on an interim basis and (3) received
$4,988,000 of partners' capital contributions. The proceeds from (1), (2) and
(3) above were used to repay the $120,000,000 originally borrowed in 1991
through an AFICA bond financing as well as to repay a $6,000,000 revolving
credit line with the GDB. $700,324 of debt issuance expenses were recorded in
August 1998 which were associated with the interim loan provided by Citicorp
Real Estate.

TAXES

As El Conquistador is not a taxable entity for Puerto Rico income tax
purposes and as each partner reports its distributive share of profits and
losses in its respective income tax return, no provision for income taxes has
been made in El Conquistador's financial statements.

INFLATION

During the past three fiscal years, the level of inflation affecting the
Resort has been relatively low. The ability of the Resort to pass on future cost
increases in the form of higher room rates

and other price increases will continue to be dependent on the prevailing
competitive environment and the acceptance of the Resort's services in the
market place.

SEASONALITY

The hotel and casino business in Puerto Rico is highly seasonal. From
December through April the occupancies of the Resort, including Las Casitas
Village, are greater than other months and the average room rates are higher
than other months resulting in higher revenues and net income primarily in the
first calendar quarter. During the calendar quarter of July 1 through September
30 El Conquistador normally has a net loss.

RECENT DEVELOPMENTS

Hurricane Georges passed through Puerto Rico on September 21 and 22, 1998.
Hurricane Georges caused approximately $36,000,000 of property related damage at
the Resort (excluding Las Casitas Village), all of which is covered by
insurance, subject to an approximately $250,000 deductible. Since the hurricane,
El Conquistador has had numerous meetings and contacts with its insurance
providers. To date, all of El Conquistador's insurance claims for physical
damage caused by Hurricane Georges have been paid by the insurers. The aggregate
amount paid to date to El Conquistador for insurance claims for physical damage
is $12,566,645. These payments include funds for: construction repairs completed
to date; materials; equipment rentals; furniture, fixture and equipment
replacements; and related associated expenses. Additional claims will be made by
El Conquistador on an on-going basis until all repairs are completed. It is
contemplated that permanent repair of certain roof areas and the heating/air
conditioning system will not be made until after the current high season ends in
April 1999. The aggregate cost of repairs to be delayed until after the high
season will be approximately $7,500,000, all of which should be covered by
insurance. The roof and heating/air conditioning system have been repaired
temporarily and are fully operational at this time.

The Resort lost at least 2,500 room nights during the 10-day period
September 20-30, 1998 as a direct result of Hurricane Georges. El Conquistador
believes such room night losses will be covered by its business interruption
insurance. To date, El Conquistador has received no payments under its business
interruption insurance. As a result of Hurricane Georges, the Resort was closed
from September 21, 1998 through October 3, 1998. Additionally, the majority of
condominium units of Las Casitas Village were damaged and were not available to
the Resort until December 10, 1998. Puerto Rico itself and other hotel
properties on the island also suffered extensive damage from Hurricane Georges.
As a result, travelers' perception of Puerto Rico as a leisure destination may
be adversely affected for the 1998/1999 tourist season. The Resort could lose
additional room nights as a result of this perception, which may or may not be
covered by its business interruption insurance. As of the date of this official
statement and prospectus, the Resort is fully operational. However, El
Conquistador cannot predict the effect that Hurricane Georges will have on its
future bookings. To the extent that additional group and leisure travelers with
reservations cancel their plans to come to the Resort or additional travelers do
not make reservations as a result of Hurricane Georges, such lost bookings could
have a material adverse effect on El Conquistador's financial condition and
results of operations.

The Puerto Rico Tourism Company launched a $1.7 million advertising
campaign to negate the negative perception created by media images of Hurricane
Georges. The campaign was entitled 'Puerto Rico Now' and includes three new 30
second commercials and a 20 minute video. The campaign commenced on October 14,
1998 with the airing of television commercials in key media markets in the
Northeastern United States during early prime time programming periods. The
video was shown at tourism industry trade shows and was distributed to
approximately 2,000 travel agents around the United States. El Conquistador
believes that the Wyndham International advertising campaign together with the
'Puerto Rico Now' campaign will limit the adverse effects of the perception of
damage caused by Hurricane Georges.

YEAR 2000 COMPLIANCE

Many computer systems were not designed to interpret any dates beyond 1999,
which could lead to business disruptions in the United States and
internationally. This technological problem is commonly referred to as the Year
2000 issue. El Conquistador recognizes the importance of minimizing the number
and seriousness of any disruptions that may occur as a result of Year 2000 and
has adopted an extensive compliance program. El Conquistador's compliance
program involves three major program areas:

corporate information technology infrastructure and reservation systems

other electronic assets (such as, but not limited to, automated time
clocks, point-of-sale, non-information technology systems, including
embedded technologies that operate fire-life safety systems, phone
systems, energy management systems and other similar systems)

third parties with whom El Conquistador conducts business

El Conquistador is applying a three phase approach to each program area:

Inventory Phase (identify systems and third parties that may be affected
by Year 2000 issues)

Assessment Phase (prioritize the inventoried systems and third parties,
assess their Year 2000 readiness, plan corrective actions)

Remediation Phase (implement corrective actions, verify implementation,
formulate contingency plans)

El Conquistador engaged a consulting firm to conduct the inventory and
assessment phases of the compliance program. The inventory and assessment phases
have been completed with respect to the Resort's corporate information
technology infrastructure and reservations system. The inventory and assessment
phases have also been completed with respect to the Resort's information
technology and other electronic assets. Based on the assessment, El Conquistador
has determined, together with its consultants, which systems are not Year 2000
compliant and the scope of the non-compliance.

El Conquistador will modify or replace a portion of its software so that
its information technology will function properly with respect to dates in the
year 2000 and thereafter. El Conquistador estimated that its Year 2000 project
cost at approximately $1,000,000, which includes approximately $950,000 for the
purchase of new hardware and software that will be capitalized and approximately
$50,000 that will be expensed as incurred. To date, El Conquistador has incurred
approximately $20,000 for assessment of the Year 2000 issue. El Conquistador's
non-information technology assets require a limited amount of modifications with
respect to the Year 2000 issue. El Conquistador is currently completing such
modifications and it does not believe that such modifications will be
significant.

El Conquistador is surveying its significant vendors and service providers
to determine the extent to which the Resort's interface systems are vulnerable
to those third parties' failure to remediate their own Year 2000 issues. El
Conquistador now expects to complete its vendor and service provider surveys in
the first quarter of 1999, but cannot guarantee that all vendors or service
providers will comply with El Conquistador's surveys. More importantly, El
Conquistador must rely on the information provided by third parties and will not
be able to test the third parties' compliance. As a result, El Conquistador will
not be able to ensure Year 2000 compliance of these vendors or service
providers. During the first quarter of 1999, El Conquistador intends to
determine the extent to which it will be able to replace vendors and service
providers that are expected to be non-compliant. Due to the lack of an
alternative source, there may be instances in which El Conquistador will have no
alternative but to remain with non-compliant vendors and service providers. As
El Conquistador identifies the non-compliant vendors and service providers, it
will then determine appropriate contingency plans.

The costs of the project and the date on which El Conquistador believes it
will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources

and other factors. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.

The project is estimated to be completed not later than November 1999. El
Conquistador believes that with the modifications to existing software and
conversions to new software, the Year 2000 issue will not pose significant
operational problems for its computer system. However, if such modifications and
conversions are not made, or are not completed in a timely manner, the Year 2000
issue could have a material impact on the operations of the Resort. Because of
the importance of addressing the Year 2000 issue, El Conquistador expects to
develop contingency plans if it determines that the remediation phase of its
compliance plan will not be fully implemented by June 30, 1999. El Conquistador
believes that the time frames set forth above will provide adequate time to test
and correct, if necessary, any remaining Year 2000 problems or to implement a
contingency plan, if necessary.

The Resort also utilizes certain computer systems and programs of
Patriot/Wyndham and its subsidiaries. Patriot/Wyndham has reported that its Year
2000 compliance involves the three major program areas discussed above.
Patriot/Wyndham is also applying the three phase approach set forth above.
Patriot/Wyndham has further reported the following on the Year 2000 issue:

Patriot/Wyndham engaged a consulting firm to conduct the inventory and
assessment phases of its compliance program. The inventory and assessment
phases have been completed with respect to Patriot/Wyndham's corporate
information technology infrastructure and reservations systems. The
inventory and assessment phases have also been completed with respect to
Patriot/Wyndham's information technology and other electronic assets that
are located in Patriot/Wyndham's hotels, other than certain hotels acquired
in 1998, other than the Resort. During the fourth quarter of 1998,
Patriot/Wyndham expects that the inventory and assessment phases will be
completed with respect to the systems used in the operation of a portion of
such other hotels whose owners have undertaken their own compliance
programs. Based on these completed assessments, Patriot/Wyndham, working
with its consultants, has determined which systems are not Year 2000
compliant and the scope of the non-compliance.

As previously disclosed, Patriot/Wyndham has been informed by the
appropriate owners or managers/operators of certain of its properties that
they intend to effect their own compliance programs. Patriot/Wyndham is
continuing to monitor the status of compliance programs being implemented
by these parties. Patriot/Wyndham is also surveying the Year 2000
compliance of the owners of the hotels that are franchised under the
Wyndham brand but not managed by Wyndham. However, as these systems are not
under Patriot/Wyndham's control, Patriot/Wyndham will be required to rely
on the information provided by these owners or managers/operators and will
not be able to test the assessment or remediation phases of these parties'
compliance programs at the hotels effecting their own programs or these
franchised hotels.

Patriot/Wyndham is now preparing the necessary work plans to remediate
the systems for which the assessment phase has been completed, including
Patriot/Wyndham's corporate information technology infrastructure and
reservations systems. Patriot/Wyndham has engaged a consulting firm to
provide the support and additional skills to effect the necessary
remediation in sufficient time for testing and any necessary modifications.
Patriot/Wyndham is also negotiating with hardware vendors to obtain the
necessary hardware components and other equipment, and software vendors to
obtain the requisite modifications, upgrades or new software to implement
Patriot/Wyndham's remediation plan.

Patriot/Wyndham presently expects to expend approximately $34 million
in connection with Year 2000 issues. To date, Patriot/Wyndham has expended
$1.25 million in connection with the inventory and assessment phases of its
compliance program and $500,000 to remediate its systems. However,
Patriot/Wyndham anticipates expenditures may increase as it completes the
inventory and assessment phases in respect to the hotels acquired in 1998
referred to above and the remediation plans are effected.

Patriot/Wyndham is also surveying its vendors and service providers
that are critical to its business to determine whether they are Year 2000
compliant. Patriot/Wyndham now expects to complete its surveys in the first
quarter of 1999, but cannot guarantee that all vendors or service providers
will comply with Patriot/Wyndham's surveys. More importantly,
Patriot/Wyndham must rely on the information provided by third parties and
will not be able to test the third parties' compliance. As a result,
Patriot/Wyndham will not be able to ensure Year 2000 compliance of those
vendors or service providers. During the first quarter of 1999,
Patriot/Wyndham intends to determine the extent to which it will be able to
replace vendors and service providers that are expected to be
non-compliant. Due to the lack of an alternative source, there may be
instances in which Patriot/Wyndham will have no alternative but to remain
with non-compliant vendors or service providers. As Patriot/Wyndham
identifies the non-compliant vendors and service providers, it will then
determine appropriate contingency plans.

Patriot/Wyndham believes that its current compliance program will
allow it sufficient time to identify which of its systems and other
electronic assets are not Year 2000 compliant and to effect the necessary
remediation to avoid substantial problems arising from Year 2000 failures.
More importantly, Patriot-Wyndham must rely on the information provided by
third parties and will not be able to test the third parties' compliance.
As a result, Patriot/Wyndham will not be able to ensure Year 2000
compliance of those vendors or service providers. During the first quarter
of 1999, Patriot/Wyndham intends to determine the extent to which it will
be able to replace vendors and service providers that are expected to be
non-compliant. Due to the lack of an alternative source, there may be
instances in which Patriot/Wyndham will have no alternative but to remain
with non-compliant vendors or service providers. As Patriot/Wyndham
identifies the non-compliant vendors and service providers, it will then
determine appropriate contingency plans.

Patriot/Wyndham believes that its current compliance program will
allow it sufficient time to identify which of its systems and other
electronic assets are not Year 2000 compliant and to effect the necessary
remedies to avoid substantial problems arising from Year 2000 failures.
Patriot/Wyndham believes that its reprogramming, upgrading and systems
replacements will be implemented and tested by June 30, 1999.
Patriot/Wyndham believes that this should provide adequate time to further
correct any problems that did not surface during the implementation and
testing for those systems. Notwithstanding that, Patriot/Wyndham does
recognize that some vendors and the owners and managers/operators of
certain of its hotels not owned and managed by Patriot/Wyndham may not
comply with its present schedules and could affect Patriot/Wyndham's timing
and remediation effects generally.

In addition to those systems within Patriot/Wyndham's control and the
control of its vendors and suppliers, there are other systems that could
have an impact on Patriot/Wyndham's businesses and which may not be Year
2000 compliant by January 1, 2000. These systems could affect the
operations of the air traffic control system and airlines or other segments
of the lodging and travel industries, or the economy and travel generally.
These systems are outside of Patriot/Wyndham's control or influence and
their compliance may not be verified by Patriot/Wyndham. However, these
systems could adversely affect Patriot/Wyndham's financial condition or
results of operation.

If Patriot/Wyndham is not successful in implementing its Year 2000
compliance plan, it may suffer a material adverse impact on its
consolidated results of operations and financial condition. Because of the
importance of addressing the Year 2000 problem, Patriot/Wyndham expects to
develop contingency plans if it determines that the compliance plans will
not be implemented by June 30, 1999.

LEGAL PROCEEDINGS

On or about November 23, 1998, Ava, Inc. d/b/a Avante Salon & Spa, which
operates a beauty salon at the Resort, filed a preliminary and permanent
injunction and a torts claim against El Conquistador and Golden Door Corp. The
case is pending in the Puerto Rico Court of First

Instance, Superior Court of Humacao. The action seeks preliminary and permanent
injunctions ordering defendants not to intervene with Avante's contractual and
property rights provided in the concession agreement pursuant to which the
beauty salon is operated. Avante also seeks damages in the sum of $5,000,000,
plus costs and attorney's fees. On December 4, 1998, defendants filed a motion
to dismiss the complaint together with their opposition to the complaint. On the
same day, the court held a hearing with respect to the preliminary injunction
without granting such injunction. At the hearing, the parties agreed to submit a
joint stipulation with respect to certain facts in order to assist the court in
rendering its decision. On December 14, 1998, the parties filed the joint
stipulation of facts. Avante requested an extension until December 23, 1998 to
file a reply to defendants' opposition to the complaint. Defendants will have
until early next year to file their reply to plaintiff's motion. The court will
then evaluate the issues presented and will decide whether to grant injunctive
relief and continue the tort action or dismiss the suit.

Other than set forth above, El Conquistador currently and from time to time
is involved in litigation incidental to the conduct of its business. In the
opinion of El Conquistador, none of the existing litigations is likely to have a
material adverse effect on El Conquistador or its business including the one set
forth above.

POLICY WITH RESPECT TO CERTAIN ACTIVITIES

The loan agreement will prohibit El Conquistador from issuing any
securities which are senior to the bonds. During the past three years, El
Conquistador has not issued any senior securities. From time to time during the
past three years, El Conquistador has borrowed monies from third-parties, its
affiliates and its partners in order to fund day-to-day operations at the Resort
as well as for capital improvements and furniture, fixtures and equipment.
Additionally, El Conquistador maintained a revolving credit facility with the
Government Development Bank of up to $6,000,000 during the period of July 1995
through May 1998. As a condition to entering into the revolving credit facility,
the Government Development Bank required the partners of El Conquistador to lend
El Conquistador $800,000. To date, $465,000 of these loans has been repaid and
$335,000 remains outstanding and will be subordinate to the bonds. Additionally,
as of September 30, 1998, El Conquistador was indebted to the Posadas de Puerto
Rico Associates, Incorporated in the aggregate principal amount of $32,021,172.
Such loan will be subordinate to the bonds. Posadas de Puerto Rico is an
indirect wholly-owned subsidiary of Wyndham International and is the owner of
the Condado Plaza Hotel & Casino. El Conquistador's ability to borrow funds in
the future will be governed by the loan agreement. To the extent that El
Conquistador is able to borrow in the future, such borrowing decisions will be
made solely by its managing general partner which will be Conquistador Holding
(SPE), Inc.

The loan agreement will prohibit El Conquistador from making loans to other
persons, offering securities in exchange for property and repurchasing or
otherwise acquiring its partnership interests or other securities, including the
bonds. Additionally, El Conquistador does not engage in the purchase and sale
(or turnover) of investments, investing in securities of other persons or
underwriting securities of other issuers. El Conquistador has not engaged in any
of the aforementioned activities during the past three years.

INVESTMENT OBJECTIVES AND POLICIES

The purpose of El Conquistador is limited to the ownership of the Resort.
El Conquistador was formed in order to develop, own and operate the Resort, and
to generate income therefrom. El Conquistador and the managing general partner,
on behalf of El Conquistador, are authorized to enter into any agreements
necessary or desirable for the operation of the Resort and ownership of the
Resort (excluding Las Casitas Village).

The Resort will be operated by the Hotel Operator. For a complete
discussion concerning the management of the Resort, see 'THE
RESORT -- Management and Marketing and the Resort.' El Conquistador does not
anticipate any additional long-term financing other than the bonds. El
Conquistador believes that its cash flows from future operations will be
sufficient to meet short-term working capital needs. Additional financing may be
required for specific projects at the Resort, including the purchase of
replacement furniture, fixtures and equipment. The loan agreement will limit El
Conquistador's ability to obtain additional financing, including secured
financing, in certain circumstances. For a description of such limitations, see
'SUMMARY OF THE LOAN AGREEMENT -- Covenants.' El Conquistador will not invest in
real estate mortgages or securities of or interests in persons primarily engaged
in real estate activities.

POLICIES WITH RESPECT TO CERTAIN TRANSACTIONS

El Conquistador was formed solely to operate the Resort and own the Resort
(excluding Las Casitas Village). El Conquistador will be prohibited from making
other investments or disposing of its assets pursuant to the loan agreement,
and, therefore, a policy with respect to such matters for executive officers and
partners of El Conquistador is not necessary.

The new partnership agreement will prohibit the general partner of El
Conquistador from engaging in any other business activities other than those as
a partner of El Conquistador. Conquistador Holding (SPE), Inc. will be the sole
general partner of El Conquistador upon consummation of this offering.
Conquistador Holding (SPE), Inc. will be a single purpose entity which will only
be permitted to engage in the business of acting as a partner of El
Conquistador. Conquistador Holding (SPE), Inc. will be prohibited from any other
business activities. However, Patriot/Wyndham, the beneficial owner of
substantially all of the partnership interests in El Conquistador will not be so
restricted.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

El Conquistador is subject to various conflicts of interest arising out of
its relationship with the partners of the partnership and their affiliates. See
'RISK FACTORS -- Potential Conflicts of Interest between El Conquistador and the
Hotel Operator' for a description of these various conflicts of interest.
Because El Conquistador will be operated by, Conquistador Holding (SPE), Inc.,
the managing general partner, these conflicts will not be resolved through
arm's-length negotiations, but through the exercise of the managing general
partner's judgment consistent with its fiduciary responsibility to WHG El Con
Corp. which will be the only other partner other than the managing general
partner. El Conquistador has agreed to indemnify the managing general partner
and its officers, directors, employees or agents, whether acting as general
partner or otherwise, except for gross negligence or willful misconduct.

Williams Hospitality, an affiliate of El Conquistador, has historically and
will continue to manage the Resort. The arrangements between El Conquistador and
Williams Hospitality, including those contained in the new management agreement,
were not negotiated at arm's-length. There can be no assurances that the terms
of the new management agreement, including the Hotel Operator's fees, are as
favorable to El Conquistador as those that could reasonably be obtained in an
arm's-length negotiation with an unrelated third party. See 'THE
RESORT -- Management and Marketing of the Resort' for a detailed description of
these arrangements.

El Conquistador is also an affiliate of Wyndham Management, which will
manage the entire Resort and market the Resort, exclusive of Las Casitas
Village. El Conquistador is also an affiliate of Grand Bay, which will market
Las Casitas Village. Each of Wyndham Management and Grand

Bay market other resorts, some of which compete directly with the Resort. There
can be no assurance that either Wyndham Management or Grand Bay will not take
actions which favor other properties that they market to the detriment the
Resort.

Wyndham International has a responsibility to its shareholders to maximize
the economic return of all of the Wyndham Resorts that it manages, not only the
Resort. There can be no assurance that Wyndham International will not take
actions or cause Wyndham Management or Grand Bay to take such actions to benefit
another Wyndham Resort or Grand Bay Resort to the detriment of the Resort. Such
actions may include, without limitation, shifting key employees from the Resort
to another Wyndham Resort, marketing other Wyndham Resorts or Grand Bay Resorts
more prominently than the Resort and not providing the financial support to the
Resort that it provides to other Wyndham Resorts.

In order to repay a portion of the $120,000,000 1991 AFICA bonds, El
Conquistador borrowed $32,021,172 from Posadas de Puerto Rico Associates,
Incorporated. Posadas de Puerto Rico is an indirect wholly-owned subsidiary of
Wyndham International, which beneficially owns approximately 23% of El
Conquistador. The loan is evidenced by a demand promissory note bearing interest
at the prime rate. This loan will be subordinate to the bonds.

Historically from time to time, El Conquistador borrowed funds from the
partners of El Conquistador. Such loans are classified as deficiency loans and
additional loans and are subordinate to the bonds. Deficiency loans were
required to be made during the five-year period from November 1993 until
November 1998. The proceeds of deficiency loans were used to pay operating costs
or any other fees or expenses related to the operation of the Resort (excluding
Las Casitas Village) or the partnership's business, including payment of
liabilities or reserves for liabilities. Deficiency loan proceeds were not used
for renovation, improvement, construction or development of the Resort. The
maximum aggregate principal amount of deficiency loans that could be called was
$7,000,000 for each general partner and $14,000,000 in total. The actual amount
of deficiency loans that were called was $7,600,000. Additional loans are
required to be made any time after all capital contributions are made and either
(1) there are outstanding $14,000,000 of deficiency loans or (2) the obligations
to make deficiency loans has terminated. The general partners have the right,
but not the obligation, to make additional loans. The proceeds of additional
loans are used to meet any of the partnership's obligations for which it has
insufficient funds. To date $9,597,120 of additional loans have been made by the
partners to El Conquistador. As of September 30, 1998, such partner loans and
related interest totalled $15,510,970. Interest on partner loans currently
ranges from 7.50% to 8.00% per annum. The most recent of such loans was in the
aggregate principal amount of $800,000 and is described under 'POLICY WITH
RESPECT TO CERTAIN ACTIVITIES' above.

THE BONDS

GENERAL

The bonds will be issued pursuant to the trust agreement in the aggregate
principal amount of $104,000,000. The bonds will be dated the date of the
initial delivery and payment for the bonds and will bear interest at such rates
and will mature (subject to the rights of redemption described below) in such
amounts on and of such years, as set forth on the inside front cover
page of this official statement and prospectus. Interest on the bonds will be
payable monthly on the first day of each month commencing on , 1999 until
maturity or prior redemption.

The bonds are issuable as fully registered bonds without coupons in
denominations of $5,000 or any integral multiple thereof. The bonds will be
registered under The Depository Trust Company Book-Entry Only System described
below. The principal or redemption price of and interest on the bonds will be
payable as described below under 'Book-Entry Only System.'

TRUSTEE

The trustee will be Banco Santander Puerto Rico. The trustee's corporate
trust office is located at 221 Ponce de Leon Avenue, Lobby Level, Hato Rey,
Puerto Rico 00918.

BOOK-ENTRY ONLY SYSTEM

The following information concerning The Depository Trust Company and its
book-entry system has been obtained from The Depository Trust Company.

The Depository will act as securities depository for the bonds. The bonds
will be issued as fully registered bonds in the name of Cede & Co., the
Depository's partnership nominee. One fully registered bond will be issued for
each maturity of the bonds in the aggregate principal amount of such maturity,
and will be deposited with the Depository.

The Depository has advised El Conquistador and the underwriters as follows:
The Depository is a limited-purpose trust company organized under the New York
Banking Law, a 'banking organization' within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code, and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. The Depository holds securities that its direct participants
deposit with the Depository. The Depository also facilitates the settlement of
securities transactions among direct participants, such as transfers and
pledges, in deposited securities through electronic book-entry changes in
accounts of the direct participants, thereby eliminating the need for physical
movement of securities. Direct participants include securities brokers and
dealers (including the underwriters), banks, trust companies, clearing
corporations, and certain other organizations. The Depository is owned by a
number of the direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the the Depository system is also available to others
such as banks, brokers, dealers and trust companies that clear transactions
through or maintain a custodial relationship with a direct participant, either
directly or indirectly. The rules applicable to the Depository and its
participants are on file with the SEC.

Purchases of bonds under the the Depository system must be made by or
through direct participants which will receive a credit for the bonds on the
Depository's records. The ownership interest of each actual beneficial owner of
each bond is in turn to be recorded on the direct and indirect participants'
records. Beneficial owners will not receive written confirmation from the
Depository of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect participant through
which the beneficial owner entered into the transaction. Transfers of ownership
interests in the bonds are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners will not
receive

certificates representing their ownership interests in the bonds, except in the
event that use of the Depository system for the bonds is discontinued.

To facilitate subsequent transfers, all bonds deposited by participants
with the Depository are registered in the name of the Depository's partnership
nominee, Cede & Co. The deposit of bonds with the Depository and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
The Depository has no knowledge of the actual beneficial owners of the bonds.
The Depository's records reflect only the identity of the direct participants to
whose accounts such bonds are credited, which may or may not be the beneficial
owners. The participants will remain responsible for keeping account of their
holdings on behalf of their customers.

Conveyance of notices and other communications by the Depository to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.

Redemption notices shall be sent to Cede & Co. If less than all of the
bonds of any maturity are being redeemed, the Depository's practice is to
determine by lot the amount of the interest of each direct participant in such
maturity to be redeemed.

Neither the Depository nor Cede & Co. will consent or vote with respect to
the bonds. Under its usual procedures, the Depository mails an 'Omnibus Proxy'
to AFICA as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those direct participants to whose
accounts the bonds are credited on the record date (identified in a listing
attached to the Omnibus Proxy).

Principal of and redemption premium, if any, and interest payments on the
bonds will be made to the Depository. The Depository's practice is to credit
direct participants' accounts on each interest payment date in accordance with
their respective holdings shown on the Depository's records unless the
Depository has reason to believe that it will not receive payment on such date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in 'street name,' and
will be the responsibility of such participant and not of the Depository, the
trustee, El Conquistador or AFICA, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to the Depository is the responsibility of the trustee, disbursement of
such payments to direct participants is the responsibility of the Depository,
and disbursement of such payments to the beneficial owners is the responsibility
of direct and indirect participants.

Each person for which a participant acquires an interest in the bonds, as
nominee, may desire to make arrangements with such participant to receive a
credit balance in the records of such participant, and may desire to make
arrangements with such participant to have all notices of redemption or other
communications to the Depository, which may affect such persons, forwarded in
writing by such participant and to have notification made of all interest
payments.

The Depository may discontinue providing its services as securities
depository with respect to the bonds at any time by giving reasonable notice to
AFICA or the trustee. In such event, AFICA will try to find a substitute
securities depository and, if unsuccessful, definitive bonds will be printed and
delivered. In addition, AFICA, in its sole discretion and without the consent of
any other person, may terminate the services of the Depository as securities
depository with respect to the bonds if AFICA determines that beneficial owners
of such bonds shall be able to obtain definitive bonds. In such event,
definitive bonds will be printed and delivered as provided in the trust
agreement and registered in accordance with the instructions of the beneficial
owners.

So long as Cede & Co., as nominee of the Depository (or any other nominee
of the Depository), is the registered owner of the bonds, all references herein
to the bondholders or registered owners of the bonds (other than under the
section 'Tax Consequences') shall mean Cede & Co., or such other nominee, in the
capacity of nominee for the Depository, and shall not mean the beneficial owners
of the bonds.

When reference is made to any action which is required or permitted to be
taken by the beneficial owners, such reference shall only relate to those
permitted to act (by statute, regulation or otherwise) on behalf of such
beneficial owners for such purposes. When notices are given, they shall be sent
by AFICA or the trustee to the Depository only.

For every registration of transfer or exchange of the book-entry bonds, the
beneficial owner may be charged a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto.

NONE OF AFICA, THE TRUSTEE OR EL CONQUISTADOR SHALL HAVE ANY RESPONSIBILITY
OR OBLIGATION TO ANY PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT TO (1) THE
ACCURACY OF ANY RECORDS MAINTAINED BY THE DEPOSITORY OR ANY PARTICIPANT, AS
DESCRIBED ABOVE; (2) THE PAYMENT OR TIMELINESS OF PAYMENT BY THE DEPOSITORY OR
ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE
PRINCIPAL AMOUNT OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (3) THE
DELIVERY OR TIMELINESS OF DELIVERY BY THE DEPOSITORY OR ANY PARTICIPANT OF ANY
NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF
THE TRUST AGREEMENT TO BE GIVEN TO BONDHOLDERS; (4) THE SELECTION OF THE
BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF
THE BONDS; OR (5) THE DEPOSITORY'S DUTIES WITH RESPECT TO ANY CONSENT GIVEN OR
OTHER ACTION TAKEN BY BONDHOLDERS.

In the event that the book-entry only system is discontinued and the
beneficial owners become registered owners of the bonds, the following
provisions will apply: The principal of the bonds and premium, if any, thereon
when due will be payable upon presentation of the bonds at the corporate trust
office of the trustee in San Juan, Puerto Rico, and interest on the bonds will
be paid by check mailed to the persons who were the registered owners, or in the
case of beneficial owners holding at least $1,000,000 aggregate principal amount
of bonds who so request by wire transfer, as of the 15th day of the month
immediately preceding the related interest payment date, as provided in the
trust agreement. Bonds may be exchanged for an equal aggregate principal amount
of bonds in other authorized denominations and of the same maturity and interest
rate, upon surrender thereof at the trustee's corporate trust office in San
Juan, Puerto Rico. The transfer of any bond may be registered only upon
surrender thereof to the trustee along with a duly executed assignment in form
satisfactory to the trustee. Upon any such registration of transfer, a new bond
or bonds of authorized denominations in an equal aggregate principal amount, of
the same maturity, bearing interest at the same rate and registered in the name
of the transferee will be executed by AFICA and authenticated by the trustee. No
charge may be made to the bondholders for any exchange or registration of
transfer of the bonds, but any bondholder requesting any such exchange shall pay
any tax or other governmental charge required to be paid with respect to such
exchange or registration of transfer. The trustee will not be required to
exchange or to register the transfer of any bond during the period of 15 days
preceding the date of giving of notice of redemption or after any bond or
portion thereof has been selected for redemption.

REDEMPTION

Mandatory Redemption Other Than Upon Event of Taxability. The bonds will be
subject to mandatory redemption at a price equal to the principal amount thereof
plus accrued and unpaid interest up to the redemption date, without premium,
(1) in whole or in part, to the extent of any condemnation, casualty or
insurance proceeds received upon the occurrence of an event of condemnation,
taking or destruction of, or damage to the Resort under the conditions set forth
in the loan agreement, and (2) in whole upon cessation of operations of the
Resort.

A cessation of operation of the Resort will not be deemed to have occurred
(1) until 30 days have elapsed after notice has been given to El Conquistador by
AFICA that operations at the Resort have ceased and El Conquistador has not
demonstrated to the satisfaction of AFICA that the Resort is being operated as
'Industrial Facilities' within the meaning of Act No. 121 of June 27, 1977 of
Puerto Rico, as amended, or that El Conquistador is, in good faith, seeking to
cause the resumption of an economically reasonable operation of the Resort as
Industrial Facilities or

(2) until receipt by AFICA and the trustee of notice from El Conquistador that
El Conquistador has no present intention of causing the resumption of operations
of the Resort as Industrial Facilities or of seeking, in good faith, to cause
the resumption of an economically reasonable operation of the Resort as
Industrial Facilities. A cessation of operation of the Resort will not be deemed
to exist on account of an occurrence of an event of condemnation, damage or
destruction of the Resort.

In addition, the term bonds (unless previously redeemed or purchased for
cancellation), are subject to mandatory redemption, in amounts equal to the
following amortization requirements:

<TABLE>
<CAPTION>
YEAR [DATE] [DATE]
------ ------------ ------------
<S> <C> <C> <C>
Term bonds maturing , 2014.......................... 2009 $ $
2010
2011
2012
2013
2014
Term bonds maturing , 2019.......................... 2014
2015
2016
2017
2018
2019
Term bonds maturing , 2024.......................... 2019
2020
2021
2022
2023
2024
Term bonds maturing , 2029.......................... 2024
2025
2026
2027
2028
2029
</TABLE>

The serial bonds mature at six-month intervals commencing ,
1999 as set forth on the inside front cover of this official statement and
prospectus.

Mandatory Redemption Upon Event of Taxability. The bonds are further
subject to mandatory redemption in whole at a price equal to the principal
amount thereof plus accrued and unpaid interest to the redemption date upon the
second occurrence of an Event of Taxability. An Event of Taxability will occur
upon receipt by AFICA and the trustee of an accountants' report to the effect
that because of the failure of El Conquistador to comply with certain provisions
of the U.S. Internal Revenue Code of 1986, as amended, as in effect on the date
of issuance of the bonds interest paid or accrued on the bonds to a Qualifying
Bondholder is includable in gross income and subject to the payment of income
taxes, a credit for the payment of which is not otherwise available under the
Internal Revenue Code as in effect on the date of such report. If redeemed, such
redemption shall occur not later than 45 days after the occurrence of such an
Event of Taxability. No such mandatory redemption shall be required as a result
of a change in the tax laws in force on the date of issuance of the bonds.

Optional Redemption. The bonds are subject to redemption, at the option of
El Conquistador, in whole or in part, on , 2009 or on any interest
payment date thereafter (which date shall not be less than 45 days from the date
that notice of such redemption is received by the

trustee) at the redemption prices set forth below (expressed as percentages of
the outstanding principal amount of such bonds), plus accrued interest to the
redemption date:

<TABLE>
<CAPTION>
REDEMPTION PERIOD REDEMPTION PRICE
- ---------------------------------------------------- ----------------------------------------------------
<S> <C>
, 2009 - , 2010......... 102.0%
, 2010 - , 2011......... 101.0%
, 2011 and thereafter................. 100.0%
</TABLE>

To exercise the foregoing optional redemption, El Conquistador is required
to deposit with the trustee moneys necessary to effect such redemption on a
business day not less than 31 days before the date on which the corresponding
redemption price is due and payable.

Selection and Notice of Redemption. At least 30 days before any redemption
date, notice thereof will be sent by the trustee via first-class mail, postage
prepaid, to Cede & Co., as nominee of the Depository, or if the book-entry only
system is discontinued as described above, by first-class mail, postage prepaid,
to the holders of the bonds to be redeemed. If less than all of the bonds are
called for redemption, the particular bonds or portions thereof to be redeemed
will be selected as provided below, except that so long as the book-entry only
system shall remain in effect, in the event of any such partial redemption, the
Depository shall reduce the credit balances of the applicable participants in
respect of the bonds in inverse order of maturity; provided that if fewer than
all of the outstanding bonds of the same maturity are called for redemption, the
bonds or portions of such maturity date to be redeemed shall be selected by the
trustee by such method as the trustee deems fair and appropriate. Such
participants shall in turn select those beneficial owners of the bonds whose
ownership interests are to be extinguished by such partial redemption, each by
inverse order of maturity or as determined by the trustee as provided above.

Each notice of redemption shall set forth:

(1) the redemption date;

(2) the redemption price;

(3) if fewer than all of the bonds then outstanding shall be called
for redemption, the distinctive numbers and letters, if any, of such bonds
to be redeemed and, in the case of bonds to be redeemed in part only, the
portion of the principal amount thereof to be redeemed;

(4) that on the date fixed for redemption such redemption price will
become due and payable upon each bond or portion thereof called for
redemption, and that interest thereon shall cease to accrue on and after
said redemption date; and

(5) the place where such bonds or portions thereof called for
redemption are to be surrendered for payment of such redemption price.

In case any bond is to be redeemed in part only, the notice of redemption
shall state also that on or after the redemption date, upon surrender of such
bond, a new bond or bonds in principal amount equal to the unredeemed portion of
such bond will be issued. Failure to mail such notice to any bondholder or any
defect in any notice so mailed shall not affect the validity of the proceedings
for the redemption of the bonds of any other bondholders.

Except with respect to the mandatory redemption of the term bonds in
accordance with the amortization requirements described above, if less than all
of the outstanding bonds shall be called for redemption, such bonds will be
redeemed in inverse order of maturity unless otherwise requested by El
Conquistador. If less than all of the bonds of any maturity are called for
redemption, the particular bonds or portions thereof to be redeemed shall be
selected by the trustee by such method as the trustee deems fair and
appropriate, in integral multiples of $5,000.

If notice of redemption is given and if sufficient funds are on deposit
with the trustee to provide for the payment of the principal of and premium, if
any, and interest on the bonds (or portions thereof) to be redeemed, then the
bonds (or portions thereof) so called for redemption

will, on the redemption date, cease to bear interest and shall no longer be
deemed outstanding or be entitled to any benefit or security under the trust
agreement.

Any moneys which have been set aside for the purpose of paying any of the
bonds, either at the maturity thereof or upon a redemption or otherwise, and
which remain unclaimed by a bondholder for a period of two years after the date
on which such bonds shall have become due and payable or deemed tendered for
purchase, may, upon the request of El Conquistador, be paid to El Conquistador
or to such office, board or body as may be entitled by law to receive the same.
Thereafter, the holder of such bonds shall look only to El Conquistador or to
such office, board or body, as the case may be, for payment and then only to the
extent of the amount so received, without interest. AFICA and the trustee shall
have no responsibility with respect to such moneys.

SOURCES OF PAYMENT AND SECURITY FOR THE BONDS

In General. The bonds are limited obligations of AFICA payable solely from
monies derived pursuant to the loan agreement and from such other amounts as may
be available to the trustee under the trust agreement and the related collateral
agreements. The bonds will not constitute a charge against the general credit of
AFICA and will not constitute an indebtedness of the government of Puerto Rico
or any of its political subdivisions other than AFICA. The partners and the
affiliates of El Conquistador are not liable with respect to the payment of
principal of, premium, if any, or interest on the bonds.

The Loan Agreement. Under the loan agreement, El Conquistador will agree to
deposit with the trustee in a bond fund established under the trust agreement
amounts sufficient to pay, together with the amounts then on deposit therein,
principal of and premium, if any, and interest on the bonds. Such deposit must
be made on the business day immediately preceding the day on which the
corresponding amounts of principal, premium, if any, and interest are due and
payable. Pursuant to the trust agreement, AFICA will assign its interest in the
loan agreement (except certain rights of AFICA to indemnification, exemption
from liabilities, notices and the payment of costs and expenses) to the trustee
as security for the bonds.

The Reserve Fund. On the Date of Issuance, El Conquistador shall cause
$9,000,000 to be deposited from the proceeds of the bonds to the credit of a
reserve fund. Moneys held for the credit of the reserve fund shall be used for
the purpose of paying the principal of and interest on the bonds when due,
whenever and to the extent that the moneys held to the credit of the bond fund
established to facilitate payments on the bonds shall be insufficient for such
purposes. If El Conquistador has failed to deposit amounts sufficient to pay
principal of and interest on the bonds as required under the loan agreement, the
trustee will transfer funds from the reserve fund to the bond fund, and will
notify El Conquistador of the existence of a deficiency in the reserve fund, on
the business day immediately succeeding the next interest payment date. In
accordance with the loan agreement, El Conquistador has the obligation to
replenish the reserve fund within 20 business days after notice from the trustee
of the existence of a reserve fund deficiency. Additionally, commencing
, 1999 and on each [ ] thereafter if the trustee
determines that there exists a deficiency in the reserve fund due to a reduction
in the market value of securities deposited in the reserve fund, as determined
by the trustee pursuant to a valuation effected as provided in the trust
agreement, El Conquistador shall be obligated to replenish the reserve fund
within 20 business days after receipt of notice from the trustee. El
Conquistador shall direct the trustee to cause the moneys held in the reserve
fund to be invested in Investment Obligations (as defined in 'Summary of the
Trust Agreement -- Investment of Funds' below) of such long-term or short-term
maturities as El Conquistador elects; provided that such Investment Obligations
deposited in the reserve fund shall mature or be subject to redemption (at the
option of the holder thereof) not later than the respective dates when moneys
held to the credit of such fund or account will be required for the purposes
intended.

Pledge Agreement and Mortgage. The bonds will be secured by a pledge of
real estate and leasehold mortgage notes in the principal amounts of
$104,000,000 and $2,000,000, respectively, and

bearing interest at the rate of 12% per annum. The mortgage notes will be
secured by a first priority mortgage lien on the Resort (excluding Las Casitas
Village) and on the Palominos Island lease, subject only to liens permitted by
the loan agreement.

The mortgage notes will be pledged to AFICA pursuant to a pledge agreement
as security for the obligations of El Conquistador under the loan agreement.
AFICA will assign its rights under the pledge agreement and the mortgage notes
to the trustee for the benefit of the bondholders.

A mortgagee title insurance policy insuring the real estate and leasehold
mortgages as a first priority lien on the Resort (excluding Las Casitas
Village), subject only to liens permitted by the loan agreement, will be
delivered on the date of issuance of the bonds in an amount equal to the
principal amount of the mortgage notes referred to above.

Personal Property Security Agreements. The bonds additionally will be
secured by a personal property security agreement which will create a first
priority security interest in a substantial portion of El Conquistador's
tangible and intangible personal property, including tangible assets, used in
connection with the operation of the Resort. A portion of El Conquistador's
personal property is subject to a senior security interest securing
approximately $574,800 of equipment financing. If sufficient moneys were
otherwise not available in the bond fund established pursuant to the trust
agreement and the $9,000,000 reserve fund for the payment of the principal of
and interest on the bonds, the trustee may institute proceedings to cause the
enforcement of its security interests under such security agreements.

Assignments. As security for its obligations under the loan agreement, El
Conquistador will enter into an assignment of leases and rents and security
agreement and an assignment of the new management agreement. The assignment
contracts perfect an assignment of certain contracts, leases, subleases,
concessions and other agreements and licenses related to the operation of the
Resort.

SUMMARY OF THE LOAN AGREEMENT

The following summary which describes certain provisions of the loan
agreement, does not purport to be complete and is subject to, and is qualified
by reference to, the loan agreement. A copy of the loan agreement is filed as an
exhibit to the registration statement of which this official statement and
prospectus is a part.

AFICA will issue the bonds and lend the proceeds to El Conquistador. El
Conquistador will agree to make payments directly to the trustee which, together
with amounts then held in the bond fund established under the trust agreement,
will be sufficient to make the payments of principal of and interest on such
bonds as the same become due. El Conquistador will make such payments from cash
it generates from operating activities. The obligations of El Conquistador under
the loan agreement will be absolute and unconditional without right of set-off
for any reason.

Pursuant to the loan agreement, El Conquistador will agree to indemnify
AFICA and to pay the costs and expenses of indemnifying the trustee against any
losses arising from the operation of the Resort or their participation in this
offering (subject to certain exceptions) and will agree to pay the legal fees
and expenses of AFICA and the trustee.

AFICA will assign all its rights under the loan agreement (except for
certain rights of AFICA to indemnification, exemption from liability and the
payment of costs and expenses) to the trustee pursuant to the trust agreement.

BOND PROCEEDS

The proceeds of the sale of the bonds will be used immediately after
completion of this offering to:

repay the $90,000,000 interim loan made on August 3, 1998 by Citicorp Real
Estate to El Conquistador and any unpaid interest thereon

reimburse El Conquistador for interest previously paid on the interim loan

to fund the $9,000,000 reserve fund

pay the $520,000 administrative fee to AFICA

pay costs and expenses associated with the issuance of the bonds,
including, printing fees, professional fees and fees of the trustee

MAINTENANCE AND OPERATION OF THE RESORT

El Conquistador will agree to cause the Resort to be operated as an
'Industrial Facility' within the meaning of Act No. 121 of the Legislature of
Puerto Rico and to be maintained, preserved and kept in good repair, working
order and condition and from time to time to make all necessary and proper
repairs, replacements and renewals; provided, however, that El Conquistador will
have no obligation to cause to be maintained, preserved, repaired, replaced or
renewed any element or unit of the Resort the maintenance, repair, replacement
or renewal of which, in the opinion of El Conquistador, becomes uneconomical to
El Conquistador because of damage or destruction or obsolescence, or change in
economic or business conditions, or change in government standards and
regulations, or the termination by El Conquistador of the operation of the
facilities to which such element or unit of the Resort is an adjunct.

DISPOSITION OF PROJECT; ASSIGNMENT OF LOAN AGREEMENT; MERGER OR CONSOLIDATION OF
EL CONQUISTADOR

The Resort may be sold, leased or otherwise disposed of with the prior
written consent of AFICA and the trustee. The said consent shall not be required
if the following conditions are met:

(1) El Conquistador (A) notifies AFICA, the trustee and the rating
agency rating the bonds of the proposed transaction, and (B) provides to
AFICA and the trustee proof reasonably satisfactory

to them (which may include an opinion of counsel approved by AFICA and the
trustee) that the consummation of the proposed transaction will not result
in the interest payable on the bonds not continuing to constitute income
from sources within Puerto Rico under the Internal Revenue Code; and

(2) the rating agency provides confirmation that the rating on the
bonds will not be withdrawn or downgraded below investment grade as a
result of the consummation of the proposed transaction. No such sale, lease
or other disposition will relieve El Conquistador of its obligations to
make payments under the loan agreement sufficient to pay principal of and
interest on the bonds as the same become due.

El Conquistador may assign the loan agreement with the prior written
consent of AFICA and the trustee. The said consent shall not be required if

(A) the conditions mentioned in (1) and (2) of the prior paragraph are
complied with by El Conquistador; and

(B) the assignee (1) expressly assumes in writing El Conquistador's
obligations under the loan agreement and (2) delivers to AFICA and the
trustee a certificate executed by its chief financial officer or treasurer
stating that none of the obligations and covenants under the loan
agreement, the trust agreement and the related collateral documents assumed
by it, or the performance thereof will conflict with, or constitute on the
part of such assignee a breach of, or default under, any indenture,
mortgage, agreement or other instrument to which such assignee is a party
or by which it is bound, or any existing law, rule, regulation, judgment,
order or decree to which such assignee is subject.

So long as any bonds are outstanding, El Conquistador will not dispose of
all or substantially all of its assets and will not consolidate or merge into
another entity; provided, however, that El Conquistador may do so if, (1) the
successor or transferee entity is organized under the laws of Puerto Rico or any
state of the United States and complies with the source of income covenants
contained in the loan agreement; and (2) if the conditions mentioned in (A) and
(B) of the prior paragraph are complied with by El Conquistador or the successor
or transferee, as the case may be.

MAINTENANCE OF SOURCE OF INCOME; ADDITIONAL INTEREST UPON EVENT OF TAXABILITY

El Conquistador will agree under the loan agreement that during each
taxable year while the bonds are outstanding it will comply with the source of
income covenants so that all interest paid or payable on the bonds will
constitute income from sources within Puerto Rico under the provisions of the
Internal Revenue Code as in effect on the date of issuance of the bonds. Failure
to comply with the source of income covenants shall constitute an Event of
Taxability. If an Event of Taxability occurs, El Conquistador is required to pay
additional interest to each Qualifying Bondholder who receives or accrues
interest on the bonds subject to federal income taxation as a result thereof.

The source of income covenants under the loan agreement require El
Conquistador, so long as it is a partnership under the Internal Revenue Code, on
any determination date, to:

(1) be a partnership;

(2) be engaged in trade or business only in Puerto Rico;

(3) not be engaged, directly or imputedly, in any trade or business
outside Puerto Rico; and

(4) not derive, directly or imputedly, any gross income which is, or
is treated as, effectively connected with, or attributable to, the conduct
of a trade or business outside Puerto Rico.

The source of income covenants under the loan agreement further require, if
El Conquistador is deemed an association taxable as a corporation for purposes
of the Internal Revenue Code, on any determination date, that:

(1) at least 80% of the gross income from all sources has been and
will be

(A) derived from sources outside the United States, or attributable
to income so derived by a subsidiary of El Conquistador, and

(B) attributable to the active conduct of a trade or business
outside the United States by El Conquistador or by a subsidiary of El
Conquistador; and

(2) all interest on the bonds will be paid by a trade or business of
El Conquistador in Puerto Rico.

The source of income covenants also require that all interest paid to, or
accrued by, a bondholder on the bonds to constitute income from sources within
Puerto Rico for purposes of the Internal Revenue Code.

Under the loan agreement, El Conquistador will be required to cause its
independent accountants to submit, no later than the last day of the third month
following the close of each of its taxable years, a report (which shall be made
in accordance with generally accepted auditing standards) stating whether in
connection with their audit of the books and records of El Conquistador, it
failed to comply with any of the source of income covenants during the taxable
year just ended and if as a consequence thereof:

(1) the interest paid to, or accrued by a beneficial owner on the
bonds constituted income from sources outside Puerto Rico for purposes of
the Internal Revenue Code as in effect on the date of issuance of the
bonds; and

(2) in his opinion, under the Internal Revenue Code as in effect on
the date of such report, interest paid or accrued on bonds held by a
Qualifying Bondholder is includable in the gross income and subject to the
payment of income taxes, a credit for the payment of which is not otherwise
available to the Qualifying Bondholder.

Upon receipt of such report, the trustee shall promptly cause a copy
thereof to be mailed to each person who is a bondholder or who was a bondholder
during the then current calendar year and during the immediately preceding
calendar year. Thereafter, any Qualifying Bondholder who has paid or is required
to pay income taxes under the Internal Revenue Code in respect of the interest
paid or accrued on the bonds may submit a written claim for additional interest.
Such claim must set forth in reasonable detail the basis therefor and the
calculation of the additional interest and must be submitted to the trustee and
El Conquistador within 180 days from the date of receipt of the trustee's notice
of an independent accountants report showing that an Event of Taxability
occurred. El Conquistador will pay such claim for additional interest to the
Qualifying Bondholder within 30 days from the date El Conquistador receives the
notice of claim from the Qualifying Bondholder.

COVENANTS

In connection with this offering, El Conquistador agreed to certain
limitations on additional indebtedness and liens. El Conquistador will be
permitted to incur additional indebtedness provided it maintains, after taking
into consideration the principal amount of and debt service for such additional
indebtedness:

(1)(A) an Additional Indebtedness Loan-to-Value Ratio of no more than
65%; and

(B) an Additional Indebtedness Debt Service Coverage Ratio of no
less than 1.75; and

(2) in the case of additional indebtedness of more than $10,000,000,
El Conquistador must deliver a letter to the trustee from the rating agency
then rating the bonds, to the effect that the rating agency reviewed the
additional indebtedness and after the incurrence of the same, the bonds
will continue to have a rating not lower than the one then assigned to the
bonds.

Additional Indebtedness Debt Service Converge Ratio means at the time of
calculation, the quotient resulting from dividing the net operating income
(before income taxes and interest and excluding depreciation and other noncash
items) of the Resort for the last full 12 month period by the sum of the amount
necessary to pay the principal and the interest of (1) the bonds and (2) the
additional indebtedness scheduled for payment over the next 12 month period.
Additional Indebtedness Loan-to-Value Ratio means at the time of calculation,
the quotient resulting from dividing (1) the total principal amount of bonds
then outstanding less the aggregate amount deposited to the credit of the bond
fund and the reserve fund, plus the principal amount of any additional
indebtedness, by (2) the appraised value of the Resort as determined by the most
recent appraisal dated not more than three years prior to the date of
calculation.

El Conquistador will be permitted to make distributions to its partners on
an annual basis provided all amounts owed with respect to the bonds during the
previous fiscal year have been paid and that the reserve fund balance is
$9,000,000 at the time of such distribution.

Additionally, El Conquistador agreed not to conduct any business other than
the ownership and operation of the Resort. These covenants may be amended or
eliminated without the consent of or notice to any bondholder, so long as the
rating agency rating the bonds confirms that such action will not result in a
downgrading below investment grade or withdrawal of its rating of the bonds.

The loan agreement contains covenants of El Conquistador normally required
of borrowers with respect to properties similar to that of the Resort, including
covenants with respect to compliance with environmental laws and regulations and
maintenance of insurance. The loan agreement permits El Conquistador to restore
or replace the Resort or portions thereof in the event of any damage due to
casualty or loss due to condemnation upon compliance with certain conditions set
forth therein.

EVENTS OF DEFAULT AND REMEDIES

Each of the following is an event of default under the loan agreement:

(1) failure by El Conquistador to pay the amounts required to be paid
with respect to principal of or premium, if any, or interest on the bonds
when the same shall become due and payable;

(2) failure by El Conquistador to make any other payments (excluding
payments referred to in (1) above and payments to replenish the $9,000,000
reserve fund) required by the loan agreement and continuation of such
failure for 30 days after written notice thereof unless an extension is
granted by the trustee prior to its expiration;

(3) failure by El Conquistador to observe and perform any other
covenant, condition, or agreement under the loan agreement (other than (1)
or (2) above) and continuation of such failure for 90 days after written
notice thereof from the trustee or AFICA unless an extension is granted by
the trustee prior to its expiration; provided, however, that if such
failure cannot be corrected within such 90-day period, it shall not
constitute an event of default if corrective action is instituted by El
Conquistador during such period and diligently pursued until such failure
is corrected; and

(4) certain events of bankruptcy, liquidation or similar proceedings
involving El Conquistador.

If by reason of Force Majeure El Conquistador is unable to perform any of
its obligations under (2) and (3) above, El Conquistador shall not be deemed in
default during the continuance of such inability, including reasonable time for
the removal of the effect thereof. Force Majeure is defined in the loan
agreement to mean, without limitation, the following: (1) acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders or
restraints of any kind of the government of the United States or of Puerto Rico
or any of their respective departments, agencies, political subdivisions or
officials, or any civil or military authority; war; insurrections; civil
disturbances; riots, epidemics; landslides; lightning; earthquakes; fires;
hurricanes; storms; droughts;

floods; washouts; arrests; restraint of government and people; explosions;
breakage, malfunction or accident to facilities, machinery, transmission pipes
or canals; partial or entire failure of utilities; shortages of labor,
materials, supplies or transportation; or (2) any cause, circumstance or event
not reasonably within the control of El Conquistador.

Upon the occurrence of any of the foregoing events of default, the trustee
may declare all unpaid amounts payable under the loan agreement in respect of
the bonds to be immediately due and payable and may take any action at law or
equity necessary to collect the payments then due and thereafter to become due,
or to enforce any obligation of El Conquistador under the loan agreement. No
remedial steps shall be taken, however, the effect of which would be to provide
funds for the payment of principal of and interest on the bonds which have not
yet matured or otherwise become due unless such principal and interest shall
have been declared due and payable under the trust agreement.

AFICA has no power to waive any default under the loan agreement or extend
the time for the correction of any default that could become an event of default
under the loan agreement without the consent of the trustee.

LIMITATION ON PARTNER'S LIABILITY

The loan agreement provides that no recourse may be had against any partner
of El Conquistador or any stockholder, officer, director, employee or agent,
among others, of such partner for any obligation under the loan agreement and
the remedies available under the loan agreement upon a default in any such
obligation shall be only against El Conquistador and its assets, including the
Resort, and shall include foreclosure pursuant to the related collateral
documents.

AMENDMENTS AND SUPPLEMENTS TO THE LOAN AGREEMENT AND THE RELATED DOCUMENTS

The loan agreement and the related documents may be amended or supplemented
without the consent of the bondholders: (1) to cure any ambiguity or formal
defect or omission therein or, in any supplement thereto; (2) to grant to or
confer upon AFICA or the trustee for the benefit of the bondholders any
additional rights, remedies, powers, benefits, authority or security that may
lawfully be granted to or conferred upon AFICA, the trustee or the bondholders;
and (3) to add to the covenants of El Conquistador for the benefit of the
bondholders.

Other than for the purposes of the above paragraph, the loan agreement and
the related documents may be amended or supplemented with the approval of the
bondholders of not less than a majority of the principal of the bonds
outstanding at the time. No amendment or supplement to the loan agreement or the
related documents will become effective without the consent of the trustee.

SUMMARY OF THE TRUST AGREEMENT

The following summary which describes certain provisions of the trust
agreement, does not purport to be complete and is subject to, and is qualified
by reference to, the trust agreement. A copy of the trust agreement is filed as
an exhibit to the Registration Statement of which this official statement and
prospectus is a part.

The trust agreement will constitute an assignment by AFICA to the trustee
of all of AFICA's right, title and interest in the loan agreement and the
related collateral documents (except for certain rights of AFICA to
indemnification, exemption from liability, the payment of costs and expenses and
the receipt of notices) in trust as security for the payment of the principal of
and interest on the bonds.

PROJECT FUND

The proceeds of the bonds (exclusive of the $9,000,000 reserve fund amount)
will be deposited with the trustee in the project fund established pursuant to
the trust agreement. The trustee will make disbursements from the project fund
immediately after completion of this offering to:

repay the $90,000,000 interim loan made on August 3, 1998 by Citicorp Real
Estate to El Conquistador and any unpaid interest thereon

reimburse El Conquistador for interest previously paid on the interim loan

pay the $520,000 administrative fee to AFICA

pay costs and expenses associated with the issuance of the bonds,
including, printing fees, professional fees and fees of the trustee

BOND FUND

The trust agreement will establish with the trustee a bond fund that shall
be used for the payment of the principal of and interest on the bonds. The
following amounts will be deposited in the bond fund:

(1) all amounts paid pursuant to the loan agreement with respect to
principal of and interest on the bonds, including payments with respect to
optional and mandatory prepayments of the bonds;

(2) all amounts derived from the related collateral documents securing
payment of the bonds; and

(3) all other moneys received by the trustee or otherwise which are
permitted or required, or are directed by El Conquistador or AFICA to be
paid into the bond fund.

RESERVE FUND

On the date of issuance of the bonds, an amount equal to $9,000,000 will be
deposited in the reserve fund created under the trust agreement. Thereafter, El
Conquistador is required to make additional deposits from time to time so that
the amounts held to the credit of the reserve fund are not less than $9,000,000.
The trustee shall use amounts held to the credit of the reserve fund to make
transfers to the bond fund to the extent necessary to pay interest on and
principal of the bonds (whether at maturity, or upon acceleration or
redemption), whenever and to the extent that the monies on deposit in the bond
fund are insufficient therefor.

After the trustee makes any disbursement from the reserve fund, El
Conquistador is obligated to deposit with the trustee, on the 20th business day
succeeding the receipt of notice from the trustee, sufficient funds to cause the
amount then to the credit of the reserve fund to equal $9,000,000. El
Conquistador is also required to similarly deposit any amount necessary to cover
any loss resulting from a decline in value of Investment Obligations held to the
credit of the reserve fund if on any date of valuation the value of such
Investment Obligations and other amounts on deposit in the reserve fund is less
than $9,000,000. Investment Obligations is defined below under the section
' -- Investment of Funds.'

RENEWAL AND REPLACEMENT FUND

The trust agreement will establish with the trustee a renewal and
replacement fund that shall be used for the payment of renewal and replacement
of furniture, fixtures and equipment for the Resort (excluding Las Casitas
Village). El Conquistador is obligated to deposit $333,333.34 in the renewal and
replacement fund on each monthly interest payment date, up to an aggregate of
$4,000,000.

After the trustee makes any disbursement from the renewal and replacement
fund, El Conquistador is required to make additional deposits with the trustee
on each monthly interest payment date of $333,333.34 until the balance of such
fund equals $4,000,000. El Conquistador is also required to similarly deposit
any amount necessary to cover any loss resulting from a decline in value of
Investment Obligations held to the credit of the renewal and replacement fund if
on any date the value of such Investment Obligations and other amounts on
deposit in the renewal and replacement fund is less than (1) the aggregate
amount deposited to date in such fund less (2) amounts disbursed by the trustee
from such fund. El Conquistador's obligations to make payments to the renewal
and replacement fund are limited to a maximum of $333,333.34 per month and
$4,000,000 in the aggregate.

INVESTMENT OF FUNDS

Moneys held for the credit of all funds and accounts under the trust
agreement shall be invested in Investment Obligations in accordance with the
instructions of El Conquistador. Any such Investment Obligations shall mature
not later than the respective dates when the money held for the credit of such
funds or accounts will be required for the purposes intended.

Investment Obligations are defined as government obligations and
obligations of any agency or instrumentality whose obligations are backed by the
full faith and credit of the United States of America and, to the extent from
time to time permitted by law,

(A) the obligations of the

(1) Federal National Mortgage Association,

(2) Federal Home Loan Banks,

(3) Federal Farm Credit System,

(4) Federal Home Loan Mortgage Corporation, and

(5) Government National Mortgage Association (to the extent not included in
government obligations);

(B) repurchase agreements with financial institutions which are members of
the Federal Reserve System or primary dealers in the United States Treasury
market the short-term obligations of which institutions or dealers are rated at
least [' '] by Moody's (or any similar rating to which it may be changed by
each such rating agency) or whose long-term obligations are rated in one of the
three highest rating categories by Moody's (without regard to any gradations
within such categories) secured by government obligations or by securities
described in clause (A); provided, that such repurchase agreement must provide
that the value of the underlying obligations shall be maintained at a current
market value, calculated at least weekly, of not less than 104% of the
repurchase price (or in the case such underlying obligations are obligations of
the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation, of not less than 105% of the repurchase price), a legal opinion
shall be furnished to the trustee to the effect that

(1) the repurchase agreement meets guidelines under the laws of Puerto Rico
for the legal investment of public funds,

(2) the trustee shall be given a first priority security interest,

(3) no independent third party shall have a lien,

(4) such obligations repurchased must be transferred to the trustee or an
independent third party agent by physical delivery or by an entry made
on the records of the issuer of such obligations,

(5) in either case, the entity should receive confirmation from the
independent third party that those securities are being held in a
safekeeping account in the name of the entity (the trust or safekeeping
departments of broker-dealers or financial institutions selling
investments or pledging collateral or underlying securities, or their
custodial agents, are not considered independent third parties for the
foregoing purposes),

(6) such repurchase agreement shall constitute a 'repurchase agreement'
within the meaning of Section 101 of the United States Bankruptcy Code,
as amended, and

(7) any investment in a repurchase agreement shall mature within 30 days;

(D) U.S. Treasury Strips, REFCORP Strips and FICO Strips;

(E) money market funds registered under the Federal Investment Company Act
of 1940, whose shares are registered under the Securities Act of 1933, and
having a rating of [' '] by Moody's;

(F) certificates of deposit secured at all times by government obligations
or collateral described in (A) which certificates are issued by commercial
banks, savings and loan associations or mutual savings banks; provided that the
collateral must be held by a third party and the trustee must have a perfected
first priority security interest in the collateral;

(G) certificates of deposit, savings accounts, deposit accounts or money
market deposits which are fully insured by the Federal Deposit Insurance
Corporation, including the Bank Insurance Fund and the Savings Association
Insurance Fund;

(H) bonds or notes issued by any state, territory or municipality which are
rated by Moody's in one of the two highest rating categories (without regard to
any gradations within such categories) assigned by such agencies;

(I) federal funds or bankers' acceptances with a maximum term of one year
of any bank which has an unsecured, uninsured and unguaranteed obligation rating
of [' '] or better by Moody's;

(J) any Puerto Rico administered pool investment fund in which AFICA is
statutorily permitted or required to invest; and

(K) any other obligation, security or investment for which the trustee
shall have received written confirmation from Moody's to the effect that no
reduction in the rating on the bonds will result from the addition of such other
obligation, security or investment.

Any investment in government obligations or in obligations described in
(A) above may be made in the form of an entry made on the records of the issuer
of the particular obligation.

Government obligations are defined as

(1) direct obligations of, or obligations the timely payment of principal
of and interest on which are unconditionally guaranteed by, the United States of
America,

(2) bonds, debentures or notes issued by Government National Mortgage
Association, and

(3) any certificates or other evidences of an ownership of a proportionate
interest in obligations or in specified portions thereof (which may consist of
specified portions of the principal thereof or the interest thereon) of the
character described in clause (1).

EVENTS OF DEFAULT

Each of the following events is an event of default under the trust
agreement:

(1) failure to pay the principal of and premium, if any, and interest
on the bonds when the same shall become due and payable by AFICA;

(2) certain events of bankruptcy, receivership, insolvency,
liquidation or similar proceedings involving El Conquistador; or

(3) any 'event of default' (other than an event of default of the type
described in (1) or (2) above) shall have occurred under the loan agreement
and such event of default shall not have been remedied or waived.

ACCELERATION OF MATURITIES

Upon the happening and continuance of an event of default specified above,
the trustee may, and upon the written request of holders of not less than 25% in
aggregate principal amounts of bonds then outstanding shall, by notice in
writing to AFICA, declare the principal of all the bonds then outstanding (if
not then due and payable) to be due and payable immediately, and upon such
declaration the same shall become and be immediately due and payable.

If at any time after the principal of bonds shall have been declared to be
due and payable, and before the entry of a final judgment or decree in any suit,
action or proceeding instituted on account of such default, or before the
completion of the enforcement of any other remedy under the trust agreement,
moneys shall have accumulated in the bond fund sufficient to pay the principal
of all bonds then outstanding (except the principal of any bonds due and payable
solely as a result of such acceleration) and the interest accrued on such bonds
since the last payment date to which interest shall have been paid or duly
provided for, interest on overdue installments of interest (to the extent
permitted by law) at the rate or rates then borne by the bonds, and the charges,
compensation, expenses, disbursements, advances and liabilities of the trustee,
and all other amounts then payable by AFICA under the trust agreement shall have
been paid or a sum sufficient to pay the same shall have been deposited with the
trustee, and every other default known to the trustee in the observance or
performance of any covenant, condition, agreement or provision contained in the
bonds or in the trust agreement shall have been cured or waived, then and in
every such case the trustee may, and upon the written direction of the holders
of not less than a majority in aggregate principal amount of the bonds then
outstanding shall, by a notice in writing to AFICA and El Conquistador, rescind
and annul such declaration and its consequences, but no such rescission or
annulment shall extend to or affect any subsequent default or impair any right
consequent thereon.

ENFORCEMENT OF REMEDIES

The holders of a majority of the aggregate principal of bonds then
outstanding will have the right, subject to indemnification of the trustee, by
an instrument or concurrent instruments in writing delivered to the trustee, to
direct the remedial proceedings to be taken by the trustee under the trust
agreement provided such directions are in accordance with law and the trust
agreement and the trustee may take any other action deemed proper by the trustee
which is not inconsistent with such directions. Except as to the indemnity
provided in the loan agreement with respect to an Event of Taxability, no
bondholder will have any right to institute any suit, action or proceeding in
equity or at law on any bond or for the execution of any trust under the trust
agreement, or for any other remedy under the trust agreement unless:

(1) such boldholder has previously given to the trustee written notice of
the event of default on account of which such suit, action or proceeding is to
be instituted;

(2) the holders of not less than 25% of the aggregate principal of bonds
then outstanding have requested the trustee, after the right to execute such
powers or right of action, as the case may be, has accrued, and have afforded
the trustee a reasonable opportunity, either to proceed to exercise such powers
or to institute such action, suit or proceeding in its or their name;

(3) the trustee has been offered reasonable security and indemnity against
the costs, expenses and liabilities to be incurred (including, without
limitation, indemnification for environmental liability); and

(4) the trustee has refused or neglected to comply with such request within
a reasonable time.

No one or more bondholders will have any right, in any manner, to affect,
disturb or prejudice any rights under the trust agreement, or to enforce any
right thereunder, except in the manner therein provided. All suits, actions and
proceedings at law or in equity must be instituted,

had and maintained in the manner provided in the trust agreement and for the
benefit of the bondholders. Any individual right of action or other right given
to one or more bondholder by law is restricted by the trust agreement to the
rights and remedies therein provided.

AMENDMENTS AND SUPPLEMENTS TO THE TRUST AGREEMENT

The trust agreement may be amended or supplemented without the consent of
the bondholders:

(1) to cure any ambiguity or to make any other provisions with respect
to matters or questions arising under the trust agreement consistent with
the provisions of the trust agreement; or

(2) to grant or confer upon the trustee for the benefit of the
bondholders any additional rights, remedies, powers, benefits, authority or
security that may lawfully be so granted or conferred; or

(3) to add to the covenants of AFICA for the benefit of the
boldholders or to surrender any right or power conferred upon AFICA under
the trust agreement; or

(4) to permit the qualification of the trust agreement under the Trust
Indenture Act of 1939 or any similar federal statute hereafter in effect or
to permit the qualification of the bonds for sale under the securities laws
of any of the states of the United States, and to add to the trust
agreement or any supplement or amendment thereto such other terms,
conditions and provisions as may be required by said Trust Indenture Act of
1939 or similar federal statute.

The trust agreement may be amended or supplemented with the consent of the
holders of a majority of the principal of the bonds outstanding at the time.
However, without the consent of each bondholder affected, any amendment to the
trust agreement may not:

(1) extend the time for the payment of the principal of or the
interest on any bond; or

(2) reduce the principal of any bond or the redemption premium, if
any, or the rate of interest thereon; or

(3) create any lien or security interest with respect to the loan
agreement or the payments thereunder; or

(4) give a preference or priority to any bond or bonds over any other
bond or bonds; or

(5) reduce the aggregate principal of the bonds required for consent
to such supplement or amendment or any waiver thereunder.

The trustee is not obligated to execute any proposed supplement or
amendment if its rights, obligations and interests would be affected thereby.
Nothing herein will affect any preexisting rights to create liens set forth in
the trust agreement.

No amendment or supplement to the trust agreement, other than to cure any
ambiguity, will become effective without the consent of El Conquistador.

DEFEASANCE

Any bond will be deemed paid and no longer entitled to any security under
the trust agreement upon satisfaction of certain conditions and the deposit with
the trustee of sufficient funds, or direct obligations of the United States of
America or obligations unconditionally guaranteed by the United States of
America, the principal of and the interest on which, when due (without any
reinvestment thereof), will provide moneys which will be sufficient to pay when
due the principal of and premium, if any, and interest due and to become due,
excluding any additional interest payable upon the second occurrence of an Event
of Taxability, on such bond. El Conquistador will be required to indemnify the
beneficial owners for any additional interest. If any bond is not to be redeemed
or does not mature within 60 days after such deposit, El Conquistador must give
irrevocable instructions to the trustee to give notice, in the same manner as
notice of redemption, that such deposit has been made. The bonds shall have not
been deemed

paid unless the trustee shall have received an opinion of counsel experienced in
bankruptcy matters to the effect that payment to the beneficial owners would not
constitute a transfer which may be voided under the provisions of the United
States Bankruptcy Code, and an opinion of counsel experienced in tax matters
under the Internal Revenue Code to the effect that, assuming El Conquistador
will continue to comply with the source of income covenants in the loan
agreement, the deposit of said obligations or moneys would not adversely affect
the treatment of interest received by the beneficial owners as income from
sources within Puerto Rico.

AFICA

GENERAL

AFICA is a body corporate and politic constituting a public corporation and
governmental instrumentality of Puerto Rico. The Legislature of Puerto Rico
determined that the development and expansion of commerce, industry, and health
and educational services within Puerto Rico is essential to the economic growth
of Puerto Rico and to attain full employment and preserve the health, welfare,
safety and prosperity of all its citizens. The Legislature also determined that
new methods of financing capital investments were required to promote industry
in Puerto Rico and to provide modern and efficient medical facilities for the
citizens of Puerto Rico. Accordingly, AFICA was created under Act No. 121 of the
Legislature of Puerto Rico, approved June 27, 1977, as amended, for the purpose
of promoting the economic development, health, welfare and safety of the
citizens of Puerto Rico. AFICA is authorized to borrow money through the
issuance of revenue bonds and to loan the proceeds thereof to finance and
refinance the acquisition, development, construction and equipping of
industrial, tourist, educational, medical and environmental pollution control
and solid waste disposal facilities. AFICA has no taxing power. AFICA's offices
are located at Minillas Government Center, De Diego Avenue, Stop 22, San Juan,
Puerto Rico 00940. AFICA's telephone number is (787) 782-4060.

GOVERNING BOARD

Act No. 121 of the Legislature of Puerto Rico provides that the governing
board of AFICA shall consist of seven members. The President of the Government
Development Bank for Puerto Rico, the Executive Director of Puerto Rico
Industrial Development Company, the Executive Director of Puerto Rico Aqueduct
and Sewer Authority, the President of the Puerto Rico Environmental Quality
Board and the Executive Director of the Puerto Rico Tourism Company are each ex
officio members of the governing board. The remaining two members of the
governing board are appointed by the Governor of Puerto Rico for terms of four
years. The following individuals are the current members of the governing board:

<TABLE>
<CAPTION>
NAME POSITION TERM OCCUPATION
- -------------------------------- ------------ ----------------- -----------------------------
<S> <C> <C> <C>
Lourdes M. Rovira............... Chairperson Indefinite President, Government
Development Bank for Puerto
Rico
Jaime Morgan Stubbe............. Member Indefinite Executive Director, Puerto
Rico Industrial Development
Company
Perfecto Ocasio................. Member Indefinite Executive Director, Puerto
Rico Aqueduct and Sewer
Authority
Hector Russe-Martinez........... Member Indefinite President, Puerto Rico
Environmental Quality Board
Jorge Davila.................... Member Indefinite Executive Director, Puerto
Rico Tourism Company
James Thordsen.................. Member June 27, 2002 President, James Thordsen,
Inc.
Jose Salas-Soler................ Member October 22, 2001 Attorney-at-Law
</TABLE>

Act No. 121 of the Legislature of Puerto Rico provides that the affirmative
vote of four members is sufficient for any action taken by the governing board.

The following individuals are currently officers of AFICA:

LOURDES M. ROVIRA, Executive Director of AFICA, is also President of
the Government Development Bank for Puerto Rico. Ms. Rovira was the
Executive Vice President of the Government Development Bank from 1996 until
her appointment as President. Prior to her appointment at the Government
Development Bank, Ms. Rovira was the chief financial officer of the
University of Puerto Rico system. Ms. Rovira received a bachelor's degree
in Business Administration from the University of Puerto Rico in 1972.

VELMARIE BERLINGERI, Assistant Executive Director of AFICA, is also a
Vice President of the Government Development Bank for Puerto Rico. Ms.
Berlingeri has been associated with the Government Development Bank since
1993. Prior to her appointment, Ms. Berlingeri worked in the investments
area of a major private sector corporation in Puerto Rico. Ms. Berlingeri
received a Bachelor of Science in Business Administration degree from the
University of Puerto Rico in 1982.

DELFINA BETANCOURT-CAPO, Secretary and General Counsel of AFICA, is
also Senior Vice President and General Counsel of the Government
Development Bank for Puerto Rico. Ms. Betancourt has been associated with
the Government Development Bank since 1984. She received a law degree from
Cornell University in 1982.

OUTSTANDING REVENUE BONDS AND NOTES OF AFICA

As of June 30, 1998, AFICA had revenue bonds and notes issued and
outstanding in the aggregate principal amount of approximately $2.2 billion.

All such bond and note issues have been authorized and issued pursuant to
trust agreements or resolutions separate from and unrelated to the trust
agreement relating to the bonds and are payable from sources other than the
payments under the loan agreement.

Under Act No. 121 of the Legislature of Puerto Rico, AFICA may issue
additional bonds and notes from time to time to finance and refinance
industrial, tourist, educational, medical or pollution control facilities.
However, any such bonds and notes would be authorized and issued pursuant to
other trust agreements or resolutions separate from and unrelated to the trust
agreement relating to the bonds described in this official statement and
prospectus and would be payable from sources other than the payments under the
loan agreement.

GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO

As required by Act No. 272 of the Legislature of Puerto Rico, approved May
15, 1945, as amended, the Government Development Bank has acted as a financial
advisor to AFICA in connection with the issuance and sale of the bonds.

The Government Development Bank is a public corporation with varied
governmental financial functions. Its principal functions are to act as
financial advisor to and fiscal agent for Puerto Rico, its municipalities and
its public corporations in connection with the issuance of bonds and notes, to
make advances to public corporations and to make loans to private enterprises
that will aid in the economic development of Puerto Rico. The underwriters have
been selected by the Government Development Bank to act from time to time as
underwriters of its obligations and the obligations of Puerto Rico, its
instrumentalities and public corporations. The underwriters or their affiliates
also participate in other financial transactions with the Government Development
Bank.

TAX CONSEQUENCES

In the opinion of Fiddler Gonzalez & Rodriguez, LLP, bond counsel, under
the provisions of the Acts of Congress and the laws of Puerto Rico now in force:

1. The bonds, and the transfer of the bonds, including any gain
derived upon the sale of the bonds, are exempt from Puerto Rico income tax
pursuant to Article 8(b) of Act No. 121 of the Legislature of Puerto Rico.

2. Interest on the bonds is:

(A) excluded from the gross income of the recipient thereof for
Puerto Rico income tax purposes pursuant to Section 1022(b)(4)(B) of the
Puerto Rico Internal Revenue Code of 1986, as amended;

(B) exempt from Puerto Rico income tax and alternative minimum tax
pursuant to Section 1022(b)(4)(B) of the Puerto Rico Internal Revenue
Code, Article 8(b) of Act No. 121 of the Legislature of Puerto Rico, and
Section 3 of the Puerto Rico Federal Relations Act; and

(C) exempt from Puerto Rico municipal license tax pursuant to
Section 9(25) of the Puerto Rico Municipal License Tax Act of 1974, as
amended, and Section 3 of the Puerto Rico Federal Relations Act.

3. The bonds are exempt from Puerto Rico personal property tax
pursuant Section 3.11 of the Puerto Rico Municipal Property Tax Act of
1991, as amended, and Section 3 of the Puerto Rico Federal Relations Act.

4. The bonds are exempt from Puerto Rico (A) gift tax with respect to
donors who are residents of Puerto Rico at the time the gift is made and
(B) estate tax with respect to estates of decedents who are residents of
Puerto Rico at the time of death, excluding, in each case, United States
citizens who acquired their United States citizenship other than by reason
of birth or residence in Puerto Rico.

In the opinion of Fiddler Gonzalez & Rodriguez, LLP, bond counsel, based
upon the provisions of the Internal Revenue Code now in force and assuming that
El Conquistador complies with the source of income covenants contained in the
loan agreement, then:

1. interest on the bonds received by, or accrued to, an individual who
is a bona fide resident of Puerto Rico during the entire taxable year in
which such interest is received or accrued is excludable from gross income
for income tax purposes under the Internal Revenue Code;

2. interest on the bonds received by, or accrued to, a corporation
organized under the laws of Puerto Rico or any foreign country is not
subject to federal income taxation provided such interest or original issue
discount is not effectively connected with the conduct of a trade or
business in the United States by such corporation; and

3. interest on the bonds is not excludable from the gross income of
the recipients thereof for federal income tax purposes under Section 103(a)
of the Internal Revenue Code.

United States taxpayers, other than individuals who are bona fide residents
of Puerto Rico during the entire taxable year, will be subject to federal income
tax on any gain realized upon the sale or exchange of the bonds. Pursuant to
Notice 89-40 issued by the United States Internal Revenue Service on March 27,
1989, gain on the sale of the bonds (excluding 'original issue discount' accrued
under the Internal Revenue Code as of the date of such sale or exchange) by an
individual who is a bona fide resident of Puerto Rico during the entire taxable
year and that is a resident of Puerto Rico for purposes of Section 865(g)(1) of
the Internal Revenue Code will constitute Puerto Rico source income and,
therefore, qualify for the exclusion provided in Section 933(1) of the Internal
Revenue Code, provided such bonds do not constitute inventory in the hands of
such individual.

You should be aware that ownership of the bonds may result in having a
portion of your interest expense allocable to interest on the bonds disallowed
for purposes of computing the regular tax and the alternative minimum tax for
Puerto Rico income tax purposes.

The opinion of Fiddler Gonzalez & Rodriguez, LLP, bond counsel, regarding
the tax consequences under the Internal Revenue Code and the Puerto Rico
Internal Revenue Code arising from ownership or disposition of the bonds is
limited to the above.

RATING

The bonds will be rated 'Baa2' by Moody's Investors Service, Inc. There is
no assurance that the rating given to the bonds will remain in effect for any
given period or that it will not be revised downward or withdrawn entirely by
Moody's if, in its sole judgment, circumstances so warrant. Any such downward
revision or withdrawal of such rating may have an adverse effect on the market
prices of the bonds. The rating of the bonds by Moody's is not a recommendation
to buy, sell or hold the bonds.

The rating given to the bonds reflects only the views of Moody's. An
explanation of the significance of such rating may be obtained only from Moody's
at 99 Church Street, New York, New York 10007. The rating does not constitute a
recommendation to buy, sell or hold the bonds.

Moody's was provided with materials relating to El Conquistador, the
Resort, the bonds and other relevant information, and no application has been
made to any other rating agency for purposes of obtaining a rating on the bonds.
In addition, if requested, El Conquistador shall deliver to Moody's, from time
to time, such documents and other relevant information required for purposes of
its due diligence on the assigned rating to the bonds.

LEGAL INVESTMENT

The bonds will be eligible for deposit by banks in Puerto Rico to secure
public funds and will be approved investments for insurance companies to qualify
them to do business in Puerto Rico as required by law.

UNDERWRITING

The underwriters of the bonds are as follows:

Citicorp Financial Services Corporation
Citibank Center
Lomas Verdes Avenue
Cupey, Puerto Rico

Subject to the terms and conditions of a certain bond purchase agreement to
be entered into among AFICA, El Conquistador and the underwriters, AFICA will
agree to sell to the underwriters, and the underwriters will agree to purchase
from AFICA, all of the bonds listed on the inside front cover page of this
official statement and prospectus. The underwriters will purchase the bonds at
the public offering price thereof less the underwriting discount set forth
below:

<TABLE>
<CAPTION>
AGGREGATE PUBLIC UNDERWRITING
OFFERING PRICE UNDERWRITING STRUCTURING/MANAGEMENT PROCEEDS TO
OF THE BONDS DISCOUNT FEE EL CONQUISTADOR(1)
- -------------------------------- ------------ ---------------------- ------------------
<S> <C> <C> <C>
$104,000,000 $ $ $
</TABLE>

- ------------

(1) The proceeds to El Conquistador set forth above is before deducting expenses
of this offering payable by El Conquistador estimated at $5,000,000, and
$9,000,000 which will be deposited in the reserve fund.

The underwriters propose initially to offer the bonds to the public, when,
as and if issued by AFICA and accepted by the underwriters, at the initial
public offering prices set forth or derived

from information shown on the inside front cover page of this official statement
and prospectus. The initial offering prices may be changed from time to time by
the underwriters. The underwriters may offer and sell the bonds to certain
dealers (including dealers depositing bonds into investment trusts) and others
at prices lower than the initial public offering prices stated or derived from
information shown on the inside front cover page hereof.

The bond purchase agreement will provide that the obligations of the
underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The underwriters are committed to
purchase all of the bonds if any are purchased.

Prior to this offering, there has been no active market for the bonds. The
underwriters have advised El Conquistador that they presently intend to make a
market in the bonds as permitted by applicable laws and regulations. The
underwriters are not obligated, however, to make a market in the bonds and any
such market making may be discontinued at any time at the sole discretion of the
underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the bonds.

El Conquistador will agree to indemnify the underwriters and AFICA against
certain civil liabilities, including liabilities under the Securities Act. IN
THE OPINION OF THE SEC, INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933 IS AGAINST PUBLIC POLICY AND THEREFORE UNENFORCEABLE.

The underwriters have in the past and may from time to time in the future
provide underwriting and other investment banking services to El Conquistador.
Citicorp Real Estate, Inc., an affiliate of Citicorp Financial Services
Corporation, is the lender under the interim loan made to El Conquistador on
August 3, 1998 and, in such capacity received customary fees for such services.

LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the bonds
are subject to the unqualified approving opinion of Fiddler Gonzalez &
Rodriguez, LLP, San Juan, Puerto Rico, bond counsel. Certain legal matters will
be passed upon for El Conquistador by Shack & Siegel, P.C., New York, New York
and by McConnell Valdes, San Juan, Puerto Rico, and for the underwriters by
Pietrantoni Mendez & Alvarez, San Juan, Puerto Rico.

CONTINUING DISCLOSURE COVENANT

El Conquistador will enter into a continuing disclosure agreement with the
trustee wherein El Conquistador will covenant for the benefit of the holders and
the beneficial owners of the bonds to file within 120 days after the end of each
fiscal year beginning after their fiscal year 1998, with each nationally
recognized municipal securities information repository and with any Puerto Rico
state information depository financial information and operating data for such
fiscal year. Such disclosure will include (1) audited financial statements,
prepared in accordance with generally accepted accounting principles in effect
from time to time, and (2) operating data and revenues, expenditures, financial
operations and indebtedness generally found in this official statement and
prospectus, such as Selected Financial Data and, Results of Operations and
Financial Condition as provided in Management's Discussion and Analysis of
Financial Condition and Results of Operations.

El Conquistador will covenant also to file in a timely manner, with each
nationally recognized municipal securities information repository or with the
Municipal Securities Rulemaking Board, and with any Puerto Rico state
information depository, notice of any of the following events with respect to
the bonds, if material:

<TABLE>
<S> <C>
(1) principal and interest payment delinquencies;
(2) non-payment related defaults;
(3) unscheduled draws on debt service reserves reflecting financial difficulties;
(4) substitution of credit or liquidity providers, or their failure to perform;
</TABLE>

<TABLE>
<S> <C>
(5) adverse tax opinions or events affecting the tax-exempt status of the bonds, including the occurrence
of an Event of Taxability;
(6) modifications to rights of bondholders;
(7) bond calls;
(8) defeasances;
(9) release, substitution, or sale of property securing repayment of the bonds; and
(10) rating changes.
</TABLE>

These covenants have been made in order to assist the underwriters in
complying with paragraph (b)(5) of Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934.

El Conquistador does not undertake to provide the above-described event
notice of a scheduled redemption, not otherwise contingent upon the occurrence
of an event, if the terms, dates and amounts of redemption are set forth in
detail in this official statement and prospectus under 'THE
BONDS -- Redemption.'

El Conquistador expects to provide the financial information and operating
data described above by delivering its audited financial statements prepared in
accordance with generally accepted accounting principles for the applicable
fiscal year and a supplemental report containing other information such as
Selected Financial Data and, Results of Operations and Financial Condition as
provided in Management's Discussion and Analysis of Financial Condition and
Results of Operations to the extent necessary to provide the financial
information and operating data described above by such deadline.

As of the date of this official statement and prospectus, there was no
Puerto Rico state information depository, and the nationally recognized
municipal securities information repositories are: Bloomberg Municipal
Repository, P.O. Box 840, Princeton, New Jersey 08542-0840; Kenny Information
Systems, Inc., Attn: Kenny Repository Service, 65 Broadway, New York, New York
10006; Thompson NRMSIR, 395 Hudson Street, New York, New York 10004, Attn:
Municipal Disclosure; and DPC Data Inc., One Executive Drive, Fort Lee, New
Jersey 07024.

El Conquistador may from time to time choose to provide notice of the
occurrence of certain other events in addition to those listed above if, in the
judgment of El Conquistador, such other events are material with respect to the
bonds, but El Conquistador does not undertake to provide any such notice of the
occurrence of any material event except those events listed above.

No bondholder may institute any suit, action or proceeding at law or in
equity for the enforcement of the foregoing covenants or for any remedy for
breach thereof, unless such bondholder shall have filed with El Conquistador
written notice of any request to cure such breach, and El Conquistador shall
have refused to comply within a reasonable time. All actions, suits or
proceedings shall be instituted only as specified in the continuing disclosure
agreement in any federal or Puerto Rico court located in the Municipality of San
Juan, and for the equal benefit of all bondholders of the outstanding bonds
benefitted by the same or a substantially similar covenant, and no remedy shall
be sought or granted other than specific performance by El Conquistador of the
covenant at issue. Notwithstanding the foregoing, no challenge to the adequacy
of the information provided in accordance with the filings mentioned above may
be prosecuted by any bondholder except in compliance with the remedial and
enforcement provisions contained in the trust agreement.

The above covenants may only be amended or waived if:

(A) the amendment or waiver is made in connection with a change in
circumstances that arises from a change in legal requirements, change in
law, or change in the identity, nature or status of El Conquistador; the
covenants, as amended, or the provision as waived, would have complied with
the requirements of Rule 15c2-12 promulgated under the Securities Exchange
Act at the time of issuance of the bonds, after taking into account any
amendments or change in circumstance as evidenced by the receipt of an
opinion of counsel experienced in federal securities laws acceptable to
the trustee and El Conquistador; and the amendment or waiver does not
materially impair the interests of the bondholders, as determined by the
trustee or

by counsel experienced in federal securities laws acceptable to the trustee
and El Conquistador; and

(B) the annual financial information containing (if applicable) the
amended operating data or financial information will explain, in narrative
form, the reasons for the amendment or waiver and the impact of the change
in the type of operating data or financial information being provided.

REPORTS OF EL CONQUISTADOR PARTNERSHIP L.P.

As a result of this offering, El Conquistador will be required to file all
reports with the SEC required by Sections 13 and 15(d) of the Securities
Exchange Act of 1934 from the date hereof at least through the end of the
reporting period for the fiscal year ending December 31, 1999. After such time,
El Conquistador does not intend to file annual or quarterly financial
information with the SEC. However, El Conquistador will file its audited annual
financial statements with each nationally recognized municipal securities
information repository and state information depository as required by Rule
15c2-12 promulgated under the Securities Exchange Act as well as provide certain
notices to such entities as well as the Municipal Securities Rulemaking Board
pursuant to such Rule. Such financial statements will also be available from El
Conquistador upon written request, but will not be sent to bondholders without
such request. Requests for any of the aforementioned reports should be addressed
to El Conquistador Partnership L.P., S.E., c/o El Conquistador Resort & Country
Club, 1000 El Conquistador Avenue, Fajardo, Puerto Rico, 00738, Attention: Chief
Financial Officer.

EXPERTS

The (1) Balance Sheet of El Conquistador as of December 31, 1997 and March
31, 1997, and the related statements of operations and deficiency in partners'
capital, and cash flows for the nine month period ended December 31, 1997 and
each of the two years in the period ended March 31, 1997, (2) Balance Sheet of
WKA El Con as of December 31, 1997, and (3) Balance Sheet of WHG El Con Corp. as
of December 31, 1997 appearing in this official statement and prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon (which contain an explanatory
paragraph describing conditions that raise substantial doubt about each of El
Conquistador's, WKA El Con's and WHG El Con Corp.'s ability to continue as a
going concern as described in: (A) the fourth paragraph of Note 14 to the
audited Financial Statements of El Conquistador, (B) the fourth paragraph of
Note 7 to the audited Balance Sheet of WKA El Con, and (C) the third paragraph
of Note 5 to the audited Balance Sheet of WHG El Con Corp.), appearing elsewhere
herein, and are included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.

The Balance Sheet of Conquistador Holding, Inc. as of June 30, 1998
appearing in this official statement and prospectus and registration statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon (which contains an explanatory paragraph describing
conditions that raise substantial doubt about Conquistador Holding, Inc.'s
ability to continue as a going concern as described in Note 5 to the
Conquistador Holding, Inc. Balance Sheet), appearing elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

MISCELLANEOUS

Appended as Appendix A and constituting part of this official statement and
prospectus is the proposed form of opinion of Fiddler Gonzalez & Rodriguez, LLP,
bond counsel.

The execution and delivery of this official statement and prospectus have
been duly authorized by AFICA, and this official statement and prospectus has
been approved by El Conquistador.

This official statement and prospectus will be filed with each nationally
recognized municipal securities information repository and with the Municipal
Securities Rulemaking Board.

PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL,
MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY

By: /s/
.....................................
ASSISTANT EXECUTIVE DIRECTOR

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
EL CONQUISTADOR PARTNERSHIP L.P.
Pro Forma Condensed Financial Statements (Unaudited)
Introduction.......................................................................................... F-2
Pro Forma Condensed Balance Sheet as of September 30, 1998............................................ F-3
Pro Forma Condensed Statement of Operations for Nine Months Ended September 30, 1998.................. F-5
Pro Forma Condensed Statements of Operations for Nine Months Ended December 31, 1997.................. F-7
Audited Financial Statements
Report of Independent Auditors........................................................................ F-9
Balance Sheet as of September 30, 1998 and 1997 and at December 31, 1997 and 1996 and March 31,
1997................................................................................................. F-10
Statements of Operations and (Deficiency in) Partners' Capital for Nine Months Ended September 30,
1998 and 1997, for the Period of January 1, 1998 to February 28, 1998, for the Period of March 1,
1998 to September 30, 1998, for the Nine Months Ended December 31, 1996 and for Fiscal Years Ended
December 31, 1997 (9 Months), March 31, 1997 and 1996................................................ F-11
Statements of Cash Flows for Nine Months Ended September 30, 1998 and 1997, for the Period of January
1, 1998 to February 28, 1998, for the Period of March 1, 1998 to September 30, 1998, for the Nine
Months Ended December 31, 1996 and for Fiscal Years Ended December 31, 1997 (9 Months), March 31,
1997 and 1996........................................................................................ F-12
Notes to Financial Statements......................................................................... F-13

WKA EL CON ASSOCIATES
Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet as of September 30, 1998................................................... F-22
Notes to Consolidated Balance Sheet................................................................... F-23
Audited Balance Sheet
Report of Independent Auditors........................................................................ F-30
Balance Sheet as of December 31, 1997................................................................. F-31
Notes to Balance Sheet................................................................................ F-32

CONQUISTADOR HOLDING, INC.
Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet as of September 30, 1998................................................... F-36
Notes to Consolidated Balance Sheet................................................................... F-37
Audited Balance Sheet
Report of Independent Auditors........................................................................ F-39
Balance Sheet as of June 30, 1998..................................................................... F-40
Notes to Balance Sheet................................................................................ F-41

WHG EL CON CORP.
Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet as of September 30, 1998................................................... F-43
Notes to Consolidated Balance Sheet................................................................... F-44
Audited Balance Sheet
Report of Independent Auditors........................................................................ F-50
Balance Sheet as of December 31, 1997................................................................. F-51
Notes to Balance Sheet................................................................................ F-52
</TABLE>

F-1

EL CONQUISTADOR PARTNERSHIP L.P.
PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

The following unaudited pro forma condensed financial statements of El
Conquistador Partnership L.P. (the 'Partnership') reflect the following
transactions: (i) the Offering and related transactions, including repayment of
the interim loan with Citicorp Real Estate; (ii) reduction in base management
fees and elimination of additional incentive management fees pursuant to the new
management agreement; and (iii) the assumption by Patriot of the Partnership's
indebtedness to the Government Development Bank in the aggregate principal
amount of $25 million. The pro forma condensed balance sheets as of September
30, 1998 and December 31, 1997, show the effects of these transactions as if
they had occurred at the date of the balance sheets. The unaudited pro forma
condensed statements of operations for the nine months ended September 30, 1998,
and for the fiscal year (9 months) ended December 31, 1997, show the effects of
these transactions as if they had occurred April 1, 1997.

The pro forma condensed financial statements were prepared by the
management of the Partnership. These pro forma condensed financial statements
may not be indicative of the results that actually would have occurred if the
transactions had been effected on the dates indicated or which may be obtained
in the future. The pro forma condensed financial statements should be read in
conjunction with the financial statements and notes thereto of the Partnership
included elsewhere in this Preliminary Official Statement and Prospectus.

F-2

EL CONQUISTADOR PARTNERSHIP L.P.
PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS(1) PRO FORMA(2)
------------ -------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................... $ 895,423 $ 1,482,239 $ 2,377,662
Restricted cash and investments held by bank............ 5,764,940 6,491,431 12,256,371
Trade accounts receivable, net of allowance for doubtful
accounts.............................................. 3,212,872 3,212,872
Inventories............................................. 1,218,803 1,218,803
Prepaid expenses and others current assets.............. 2,110,483 2,110,483
------------ -------------- ------------
Total current assets............................... 13,202,521 7,973,670 21,176,191
Land, building and equipment:
Land.................................................... 20,255,500 20,255,500
Building................................................ 191,746,169 191,746,169
Furniture, fixture and equipment........................ 21,141,052 21,141,052
Construction in progress................................ 2,491,401 2,491,401
------------ -------------- ------------
235,634,122 235,634,122
Less accumulated depreciation........................... 3,341,716 3,341,716
------------ -------------- ------------
232,292,406 232,292,406
Operating equipment, net..................................... 1,451,521 1,451,521
Deferred debt issuance costs, net of accumulated............. 639,441 4,360,559 5,000,000
Goodwill, net of accumulated amortization of $140,136........ 6,974,516 6,974,516
------------ -------------- ------------
Total assets............................................ $254,560,405 $ 12,334,229 $266,894,634
------------ -------------- ------------
------------ -------------- ------------

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Trade accounts payable.................................. $ 5,068,064 $ $ 5,068,064
Advance deposits........................................ 5,346,761 5,346,761
Accrued interest........................................ 1,026,330 (1,026,330) 0
Other accrued liabilities............................... 6,832,582 6,832,582
Due to affiliated companies............................. 32,909,749 32,909,745
Note payable............................................ 90,000,000 (90,000,000) 0
Current portion of chattel mortgages and capital lease
obligations........................................... 167,585 167,585
------------ -------------- ------------
Total current liabilities.......................... 141,351,071 (91,026,330) 50,324,741
Long-term debt............................................... 25,000,000 79,000,000 104,000,000
Due to affiliated companies.................................. 15,594,962 15,594,962
Due to partners.............................................. 15,510,970 15,510,970
Partners' capital:
Limited partners........................................ 48,537,892 20,706,475 69,244,367
General partners........................................ 8,565,510 3,654,084 12,219,594
------------ -------------- ------------
Total partners' capital............................ 57,103,402 24,360,559 81,463,961
------------ -------------- ------------
Total liabilities and partners' capital............ $254,560,405 $ 12,334,229 $266,894,634
------------ -------------- ------------
------------ -------------- ------------
</TABLE>

(footnotes on next page)

F-3

(footnotes from previous page)

<TABLE>
<CAPTION>
(1)

DEFERRED
DEBT
RESTRICTED ISSUANCE ACCRUED NOTE LONG-TERM PARTNERS
CASH CASH COSTS INTEREST PAYABLE DEBT CAPITAL
----------- ----------- ---------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
(a) $ 704,908 $ (704,908)
1,803,661 (1,803,661)
(b) (1,026,330) $1,026,330
(c) $ (639,441) $ 639,441
(d) 9,000,000 5,000,000 $90,000,000 $(104,000,000)
(e) 25,000,000 (25,000,000)
----------- ----------- ---------- ---------- ----------- ------------- ------------
$ 1,482,239 $ 6,491,431 $4,360,559 $1,026,330 $90,000,000 $ (79,000,000) $(24,360,559)
----------- ----------- ---------- ---------- ----------- ------------- ------------
----------- ----------- ---------- ---------- ----------- ------------- ------------
</TABLE>

(a) Represents receipts of restricted cash associated with the interim loan
with Citicorp Real Estate.

<TABLE>
<S> <C>
FF&E reserve $ 704,908
Interest reserve 1,803,661
------------
Total restricted cash $ 2,508,569
------------
------------
</TABLE>
(b) Represents the payment of accrued interest associated with the interim
loan.
(c) Represents the write-off of deferred financing costs associated with the
interim loan.
(d) Represents the gross proceeds from the offering and the application of
those proceeds.
<TABLE>
<S> <C>
Repay interim loan $ 90,000,000
Restricted cash required by offering 9,000,000
Payment of deferred financing costs 5,000,000
------------
$104,000,000
------------
------------
</TABLE>
(e) Represents the reduction in long term debt of $25,000,000 related to the
Government Development Bank debt which will be assumed by Patriot. The
assumption will be a capital contribution by Patriot.
(2) Assumes that the offering and related transactions, including repayment of
the interim loan, were completed as of the balance sheet date.

F-4

EL CONQUISTADOR PARTNERSHIP L.P.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS(1) PRO FORMA(2)
----------- -------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Rooms......................................................... $32,678,642 $ 32,678,642
Food and beverage............................................. 23,327,433 23,327,433
Casino........................................................ 3,550,742 3,550,742
Other income................................................. 20,071,955 20,071,955
----------- -------------- ------------
79,628,772 79,628,772
Less casino promotional allowances............................ 511,532 511,532
----------- -------------- ------------
Net revenues....................................................... 79,117,240 79,117,240
Costs and expenses:
Rooms......................................................... 11,298,148 11,298,148
Food and beverage............................................. 13,718,918 13,718,918
Casino........................................................ 2,386,663 2,386,663
Selling, general and administrative........................... 11,801,210 11,801,210
Management and incentive management fees...................... 5,183,858 $ (3,270,141) 1,913,717
Property operation, maintenance and energy costs.............. 8,070,548 8,070,548
Depreciation and amortization................................. 5,669,578 (445,507) 5,224,071
Other expenses................................................ 7,427,975 7,427,975
----------- -------------- ------------
65,556,898 (3,715,648) 61,841,250
----------- -------------- ------------
Income from operations............................................. 13,560,342 3,715,648 17,275,990
Interest income.................................................... 149,377 149,377
Interest expense................................................... (12,159,106) (4,096,474) (8,062,632)
----------- -------------- ------------
Income before extraordinary items.................................. $ 1,550,613 7,812,122 9,362,735
Loss from early extinguishment of debt............................. 1,676,613 (1,676,613) --
----------- -------------- ------------
Net (loss) income............................................. $ (126,000) $ 9,488,735 $ 9,362,735
----------- -------------- ------------
----------- -------------- ------------
</TABLE>

- ------------

<TABLE>
<CAPTION>
(1)

MANAGEMENT
FEE AND DEPRECIATION
INCENTIVE AND INTEREST EXTRAORDINARY NET
FEE AMORTIZATION EXPENSE ITEM INCOME
----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
(a) $(5,183,858) $ 5,183,858
(b) 1,750,324 (1,750,324)
163,393 (163,393)
(c) $(570,507) 570,507
(d) 125,000 (125,000)
(e) $(8,842,756) 8,842,756
(f) 4,746,282 (4,746,282)
(g) $(1,676,613) 1,676,613
----------- ------------- ----------- ------------- -----------
$(3,270,141) $(445,507) $(4,096,474) $(1,676,613) $ 9,488,735
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
</TABLE>

(a) Represents the elimination in historical base management fees of 3.5%
($2,792,235) and incentive management fees of 10% ($2,391,623) which were
accrued based on the Resort's gross revenues and gross operating profit,
respectively, and interest thereon.

(b) Represents the base management fees of 2.0% of gross revenues of the Resort
(excluding Las Casitas Village) and the implementation of a trade name fee
of 0.5% of gross room revenues of the Resort (excluding Las Casitas
Village). No adjustment has been made with respect to the new marketing
fee of 1.5% of gross room revenues of the Resort (excluding Las Casitas
Village) and 1.0% of gross room revenues of Las Casitas Village payable to
Williams Hospitality pursuant to the new management agreement. The
Partnership had previously incurred marketing expenses internally at
approximately the same costs. As the marketing function will now be
outsourced to its affiliate, the Partnership believes that the Resort's
total historical marketing expenses will be substantially the same on a
pro forma basis.

F-5

<TABLE>
<S> <C>
Base management fee $1,750,324
Trade name fee 163,393
----------
$1,913,717
----------
----------
</TABLE>
(c) Represents the elimination of the deferred loan cost amortization
associated with the 1991 AFICA bonds. These bonds were repaid with the net
proceeds from the interim loan with Citicorp Real Estate on August 3, 1998.

(e) Represents the elimination of the interest associated with the 1991 AFICA
bonds and the interim loan with Citicorp Real Estate.

(f) Represents the interest on the bonds at an assumed rate of 6.08% per annum.

(g) Represents the elimination of the extraordinary item recorded for the full
amortization of deferred financing costs for the 1991 AFICA bonds.

(2) Assumes that the offering and related transactions, including repayment of
the interim loans with Citicorp Real Estate, were completed on April 1,
1997. Also assumes that the new management agreement became effective as of
April 1, 1997.

F-6

EL CONQUISTADOR PARTNERSHIP L.P.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR FISCAL YEAR (NINE MONTHS) ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS(1) PRO FORMA(2)
------------ -------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Rooms........................................................ $ 25,129,621 $ 25,129,621
Food and beverage............................................ 17,428,549 17,428,549
Casino....................................................... 3,553,713 3,553,713
Other income................................................. 14,473,191 14,473,191
------------ -------------- ------------
60,585,074 60,585,074
Less casino promotional allowances........................... 458,447 458,447
------------ -------------- ------------
Net revenues...................................................... 60,126,627 60,126,627

Costs and expenses:
Rooms........................................................ 9,603,101 9,603,101
Food and beverage............................................ 12,314,635 12,314,635
Casino....................................................... 2,383,568 2,383,568
Selling, general and administrative.......................... 11,996,536 11,996,536
Management and incentive management fees..................... 2,984,995 (1,528,841) 1,456,154
Property operation, maintenance and energy costs............. 9,094,645 9,094,645
Depreciation and amortization................................ 6,886,836 (2,506,024) 4,380,812
Other expenses............................................... 6,875,562 6,875,562
------------ -------------- ------------
62,139,878 (4,034,865) 58,105,013
------------ -------------- ------------
Income (loss) from operations..................................... (2,013,251) 4,034,865 2,021,614

Interest income................................................... 127,840 127,840
Interest expense.................................................. (13,156,711) (5,094,079) (8,062,632)
------------ -------------- ------------
Net (loss) ............................................. $(15,042,122) $ 9,128,944 $ (5,913,178)
------------ -------------- ------------
------------ -------------- ------------
</TABLE>

- ------------

(1)

<TABLE>
<CAPTION>
MANAGEMENT
FEE AND DEPRECIATION
INCENTIVE AND INTEREST NET
FEE AMORTIZATION EXPENSE INCOME
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
(a)..................................... $(2,984,995) $ 2,984,995
(b)..................................... 1,330,506 (1,330,506)
125,648 (125,648)
(c)..................................... $ (733,509) 733,509
(d)..................................... 125,000 (125,000)
(e)..................................... (1,897,515) 1,897,515
(f)..................................... $ (9,840,361) 9,840,361
(g)..................................... 4,746,282 (4,746,282)
----------- ------------ ------------ ------------
$(1,528,841) $ (2,506,024) $ (5,094,079) $ 9,128,944
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
</TABLE>

(a) Represents the elimination in historical base management fees of 3.5%
($2,124,952) and incentive management fees of 10% ($860,043) which were
accrued based on the Resort's gross revenues and gross operating profit,
respectively, and interest thereon.

(footnotes continued on next page)

F-7

(footnotes continued from previous page)

new management agreement. The Partnership had previously incurred marketing
expenses internally at approximately the same costs. As the marketing
function will now be outsourced to its affiliate, the Partnership believes
that the Resort's total historical marketing expenses will be substantially
the same on a pro forma basis.

<TABLE>
<S> <C>
Base management fee............................................................... $1,330,506
Trade name fee.................................................................... 125,648
----------
$1,456,154
----------
----------
</TABLE>

(c) Represents the elimination of the deferred loan cost amortization associated
with the 1991 AFICA bonds. These bonds were repaid with the net proceeds
from the interim loan with Citicorp Real Estate on August 3, 1998.

(d) Represents the amortization of the deferred loan costs associated with the
offering estimated at approximately $5.0 million. The costs are amortized on
a straight-line basis over the 30-year term of the bonds at a rate of
$125,000 for the fiscal year beginning April 1, 1997 through December 31,
1997, and the effect of the acquisition of the Partnership by
Patriot/Wyndham related to depreciation and deferred cost amortization.

(e) Represents the elimination of deferred pre-opening costs associated with the
1993 pre-opening marketing expenses of the Resort.

(f) Represents the elimination of the interest associated with the 1991 AFICA
bonds and the interim loan with Citicorp Real Estate.

(g) Represents the interest on the bonds at an assumed rate of 6.08% per annum.

(2) Assumes that the offering and related transactions, including repayment of
the interim loan with Citicorp Real Estate, were completed on Apri 1, 1997.
Also assumes that the new management agreement became effective as of April
1, 1997.

F-8

REPORT OF INDEPENDENT AUDITORS

The Partners
EL CONQUISTADOR PARTNERSHIP L.P.

We have audited the accompanying balance sheets of El Conquistador
Partnership L.P. as of December 31 and March 31, 1997, and the related
statements of operations and deficiency in partners' capital, and cash flows for
the nine month period ended December 31, 1997 and for each of the two years in
the period ended March 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of El Conquistador Partnership
L.P. at December 31 and March 31, 1997, and the results of its operations and
its cash flows for the nine month period ended December 31, 1997 and for each of
the two years in the period ended March 31, 1997, in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that El
Conquistador Partnership L.P. will continue as a going-concern. As more fully
described in Note 14, El Conquistador Partnership L.P. did not renew or replace,
prior to June 9, 1998, a letter of credit collateralizing $120,000,000 of
indebtedness and the debt was required to be repaid on August 3, 1998. The debt
was repaid partially with the proceeds from a short-term loan due on January 29,
1999 and partially with the proceeds of an advance from Posadas de Puerto Rico
Associates, Incorporated, an affiliate of the Partnership. This condition raises
substantial doubt about the Partnership's ability to continue as a
going-concern. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classifications of
assets or the amounts and classifications of liabilities that may result from
the outcome of this uncertainty.

ERNST & YOUNG LLP

San Juan, Puerto Rico
June 12, 1998, except for the third,
fourth, sixth and seventh paragraphs of Note 14
as to which the dates are July 13,
August 3, September 21, and November 3, 1998,
respectively

F-9

EL CONQUISTADOR PARTNERSHIP L.P.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
MARCH 31, ---------------------------- ----------------------------
1997 1997 1996 1998 1997
------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash.................................... $ 2,380,218 $ 1,128,177 $ 1,048,357 $ 895,423 $ 731,070
Restricted cash and investments held by
bank.................................. 3,360,607 3,480,539 3,332,324 5,764,940 3,396,721
Trade accounts receivable, less
allowance for doubtful accounts of
$269,115 in March 31, 1997, $346,436
and $215,848 in December 31, 1997 and
1996 and $248,021 and $296,436 in
September 30, 1998 and 1997........... 4,764,607 5,851,394 4,927,730 3,212,872 2,722,875
Due from affiliated companies........... 428,987 96,365 415,351 -- 473,398
Inventories............................. 1,662,877 1,673,266 1,585,225 1,218,803 1,550,079
Prepaid expenses and others current
assets................................ 1,020,716 1,723,603 1,207,886 2,110,483 1,762,364
------------ ------------ ------------ ------------ ------------
Total current assets................ 13,618,012 13,953,344 12,516,873 13,202,521 10,636,507
Due from affiliated company................. 418,957 71,429 421,024 -- 146,845
Land, building and equipment:
Land.................................... 14,372,707 14,372,707 14,372,707 20,255,500 14,372,707
Building................................ 158,039,190 158,039,190 158,039,190 191,746,169 158,039,190
Furniture, fixture and equipment........ 32,664,796 34,658,913 32,937,874 21,141,052 33,807,008
Construction in progress................ -- -- -- 2,491,401 --
------------ ------------ ------------ ------------ ------------
205,076,693 207,070,810 205,349,771 235,634,122 206,218,905
Less accumulated depreciation........... 21,116,551 25,944,072 19,527,910 3,341,716 24,344,919
------------ ------------ ------------ ------------ ------------
183,960,142 181,126,738 185,821,861 232,292,406 181,873,986
Operating equipment, net.................... 1,592,219 1,488,342 1,467,384 1,451,521 1,417,502
Deferred debt issuance costs, net of
accumulated amortization of $5,709,747 in
March 31, 1997, $6,443,252 and $5,465,254
in December 31, 1997 and 1996, and
$224,743 and $4,165,846 in September 30,
1998 and 1997............................. 2,980,622 2,247,117 3,225,115 639,441 2,491,619
Deferred pre-opening costs, net of
accumulated amortization of $10,519,175 in
March 31, 1997, $11,844,985 and
$10,077,235 in December 31, 1997 and 1996,
and $0 and $11,403,048 in September 30,
1998 and 1997............................. 2,860,504 1,534,694 3,302,444 -- 1,976,631
Goodwill, net of accumulated amortization of
$140,136 at September 30, 1998............ -- -- -- 6,974,516 --
------------ ------------ ------------ ------------ ------------
Total assets........................ $205,430,456 $200,421,664 $206,754,701 $254,560,405 $198,543,090
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
LIABILITIES AND (DEFICIENCY IN) PARTNERS'
CAPITAL
Current liabilities:
Trade accounts payable.................. $ 5,474,496 $ 6,035,380 $ 8,332,877 $ 5,068,064 $ 6,206,626
Advance deposits........................ 5,572,317 10,104,458 6,050,522 5,346,761 3,873,409
Accrued interest........................ 1,785,687 1,597,476 1,598,857 1,026,330 1,664,324
Other accrued liabilities............... 5,271,335 5,058,633 4,615,158 6,832,582 4,828,201
Due to affiliated companies............. 545,824 972,686 1,524,068 32,909,749 608,349
Note payable to bank.................... 1,500,000 6,000,000 6,273,359 90,000,000 6,000,000
Current portion of long-term debt....... 120,000,000 120,000,000 -- -- 120,000,000
Current portion of chattel mortgages and
capital lease obligations............. 2,679,819 1,893,063 2,444,993 167,585 2,679,819
------------ ------------ ------------ ------------ ------------
Total current liabilities............... 142,829,478 151,661,696 30,839,934 141,351,071 145,860,728
Long-term debt.............................. 25,000,000 25,000,000 145,000,000 25,000,000 25,000,000
Chattel mortgages and capital lease
obligations, net of current portion....... 1,660,040 -- 2,625,918 -- 385,042
Due to affiliated companies................. 11,491,977 10,386,002 9,867,677 15,594,962 9,872,659
Due to partners............................. 37,377,424 41,344,551 36,757,360 15,510,970 40,841,237
(Deficiency in) partners' capital:
Limited partners........................ (10,989,193) (23,774,997) (15,585,675) 48,537,892 (19,904,092)
General partners........................ (1,939,270) (4,195,588) (2,750,413) 8,565,510 (3,512,484)
------------ ------------ ------------ ------------ ------------
Total (deficiency in) partners' capital..... (12,928,463) (27,970,585) (18,336,088) 57,103,402 (23,416,576)
------------ ------------ ------------ ------------ ------------
Total liabilities and deficiency in
partners' capital................. $205,430,456 $200,421,664 $206,754,701 $254,560,405 $198,543,090
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>

See accompanying notes.

F-10

EL CONQUISTADOR PARTNERSHIP L.P.
STATEMENTS OF OPERATIONS AND (DEFICIENCY IN) PARTNERS' CAPITAL

<TABLE>
<CAPTION>
NINE MONTH PERIOD ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Rooms................ $ 40,023,903 $ 38,817,160 $ 25,129,621 $ 24,419,749
Food and beverage.... 26,235,365 26,188,693 17,428,549 17,633,438
Casino............... 6,005,242 6,179,133 3,553,713 4,011,214
Other income......... 21,959,328 19,165,969 14,473,191 12,954,106
------------ ------------ ------------ ------------
94,223,838 90,350,955 60,585,074 59,018,507
Less casino
promotional
allowances......... 1,265,710 1,136,499 458,447 849,206
------------ ------------ ------------ ------------
Net revenues..... 92,958,128 89,214,456 60,126,627 58,169,301
Costs and expenses:
Rooms................ 12,377,694 12,853,157 9,603,101 8,242,928
Food and beverage.... 17,602,484 17,638,186 12,314,635 12,811,291
Casino............... 3,848,981 3,686,904 2,383,568 2,764,980
Selling, general and
administrative..... 14,657,312 12,992,841 11,996,536 10,449,921
Management and
incentive
management fees.... 5,680,355 5,394,675 2,984,995 2,969,676
Property operation,
maintenance and
energy costs....... 12,382,577 12,396,063 9,094,645 9,389,203
Depreciation and
amortization....... 9,146,664 10,499,296 6,886,836 6,856,179
Other expenses....... 9,702,212 9,201,228 6,875,562 6,943,646
------------ ------------ ------------ ------------
85,398,279 84,662,350 62,139,878 60,427,824
------------ ------------ ------------ ------------
Income (loss) from
operations............. 7,559,849 4,552,106 (2,013,251) (2,258,523)
Interest income.......... 199,110 228,625 127,840 139,431
Interest expense......... (17,162,132) (17,021,764) (13,156,711) (12,691,706)
------------ ------------ ------------ ------------
Income (loss) before
extraordinary items.... (9,403,173) (12,241,033) (15,042,122) (14,810,798)
Loss from early
extinguishment of
debt................... -- -- -- --
------------ ------------ ------------ ------------
Net income (loss)........ (9,403,173) (12,241,033) (15,042,122) (14,810,798)
(Deficiency in) partners'
capital at beginning of
period................. (3,525,290) 8,715,743 (12,928,463) (3,525,290)
Partners' capital
contribution........... -- -- -- --
------------ ------------ ------------ ------------
(Deficiency in) partners'
capital at end of
period................. $(12,928,463) $ (3,525,290) $(27,970,585) $(18,336,088)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

<CAPTION>
NINE MONTH PERIOD ENDED
JANUARY 1 TO MARCH 1 TO SEPTEMBER 30,
FEBRUARY 28, SEPTEMBER 30, ---------------------------
1998 1998 1998 1997
-------------- ------------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Rooms................ $ 10,755,530 $ 21,923,112 $ 32,678,642 $ 31,669,995
Food and beverage.... 6,475,176 16,852,257 23,327,433 20,420,838
Casino............... 931,502 2,619,240 3,550,742 4,266,432
Other income......... 6,749,398 13,322,557 20,071,955 18,141,981
-------------- ------------- ------------ ------------
24,911,606 54,717,166 79,628,772 74,499,246
Less casino
promotional
allowances......... 158,420 353,112 511,532 687,092
-------------- ------------- ------------ ------------
Net revenues..... 24,753,186 54,364,054 79,117,240 73,812,154
Costs and expenses:
Rooms................ 3,108,760 8,189,388 11,298,148 10,542,296
Food and beverage.... 3,523,059 10,195,859 13,718,918 12,916,594
Casino............... 740,044 1,646,619 2,386,663 2,703,614
Selling, general and
administrative..... 2,633,989 9,167,221 11,801,210 11,696,805
Management and
incentive
management fees.... 1,944,369 3,239,489 5,183,858 4,607,504
Property operation,
maintenance and
energy costs....... 2,039,404 6,031,144 8,070,548 9,080,128
Depreciation and
amortization....... 1,555,516 4,114,062 5,669,578 6,922,552
Other expenses....... 1,837,481 5,590,494 7,427,975 7,342,239
-------------- ------------- ------------ ------------
17,382,622 48,174,276 65,556,898 65,811,732
-------------- ------------- ------------ ------------
Income (loss) from
operations............. 7,370,564 6,189,778 13,560,342 8,000,422
Interest income.......... 43,300 106,077 149,377 150,251
Interest expense......... (3,300,966) (8,858,140) (12,159,106) (13,231,161)
-------------- ------------- ------------ ------------
Income (loss) before
extraordinary items.... 4,112,898 (2,562,285) 1,550,613 (5,080,488)
Loss from early
extinguishment of
debt................... -- (1,676,613) (1,676,613) --
-------------- ------------- ------------ ------------
Net income (loss)........ 4,112,898 (4,238,898) (126,000) (5,080,488)
(Deficiency in) partners'
capital at beginning of
period................. (27,970,585) (23,857,687) (27,970,585) (18,336,088)
Partners' capital
contribution........... -- 85,199,987 85,199,987 --
-------------- ------------- ------------ ------------
(Deficiency in) partners'
capital at end of
period................. $ (23,857,687) $ 57,103,402 $ 57,103,402 $(23,416,576)
-------------- ------------- ------------ ------------
-------------- ------------- ------------ ------------
</TABLE>

See accompanying notes.

F-11

EL CONQUISTADOR PARTNERSHIP L.P.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH PERIOD ENDED
MARCH 31, DECEMBER 31,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................. $ (9,403,173) $(12,241,033) $(15,042,122) $(14,810,798)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization... 9,146,664 10,499,296 6,886,836 6,856,179
Loss on early extinguishment of
debt.......................... -- -- -- --
Provision for losses on accounts
receivable.................... 205,400 363,245 119,000 115,400
Incentive management fees....... 2,375,526 2,224,381 860,043 899,148
Deferred interest expense to
partners and affiliates....... 3,100,085 2,995,431 2,417,475 2,678,051
Changes in operating assets and
liabilities:
Restricted cash and
investments held by bank.. (481,252) 503,353 (119,932) (452,969)
Trade accounts receivable... 332,877 1,987,789 (1,205,787) 259,754
Inventories................. (140,414) 529,503 (10,389) (62,762)
Prepaid expenses and other
current assets............ (74,811) 26,105 (702,887) (261,981)
Trade accounts payable and
advance deposits.......... (179,123) (3,663,803) 5,093,025 675,331
Accrued interest and other
accrued liabilities....... 873,753 (1,220,058) (400,913) 2,512,878
Affiliated companies, net... 99,017 (97,985) 690,646 1,604,522
------------ ------------ ------------ ------------
Net cash provided by (used in)
operating activities.............. 5,854,549 1,906,224 (1,415,005) 12,753
INVESTING ACTIVITIES
Purchases of property and
equipment......................... (1,305,594) (826,611) (1,994,117) (1,624,905)
(Purchases) usage of operating
equipment, net.................... (122,869) (37,454) 103,877 1,966
------------ ------------ ------------ ------------
Net cash used in investing
activities........................ (1,428,463) (864,065) (1,890,240) (1,622,939)
FINANCING ACTIVITIES
Payments of principal on long-term
debt.............................. (2,429,492) (2,198,146) (2,446,796) (1,698,440)
Proceeds from notes payable to
bank.............................. 9,500,000 7,684,685 4,500,000 3,500,000
Payments of principal on notes
payable to bank................... (10,773,359) (6,549,685) -- --
Payment of loan extension costs.... -- -- -- --
Proceeds from partners', affiliated
loans, and capital
contributions..................... 800,000 -- -- --
------------ ------------ ------------ ------------
Net cash (used in) provided by
financing activities.............. (2,902,851) (1,063,146) 2,053,204 1,801,560
------------ ------------ ------------ ------------
Net increase (decrease) in cash.... 1,523,235 (20,987) (1,252,041) 191,374
Cash at beginning of period........ 856,983 877,970 2,380,218 856,983
------------ ------------ ------------ ------------
Cash at end of period.............. $ 2,380,218 $ 856,983 $ 1,128,177 $ 1,048,357
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Supplemental disclosure of cash
flow information:
Interest paid................... $ 13,789,097 $ 14,026,453 $ 10,927,447
------------ ------------ ------------
------------ ------------ ------------
Supplemental schedule of noncash
investing activities:
Equipment transferred from an
affiliate $ 439,600
------------
------------

<CAPTION>
JANUARY 1 MARCH 1 NINE MONTH PERIOD ENDED
TO TO SEPTEMBER 30,
FEBRUARY 28, SEPTEMBER 30, ---------------------------
1998 1998 1998 1997
------------- ------------- ------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................. $ 4,112,898 $ (4,238,898) $ (126,000) $(5,080,488)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization... 1,555,516 4,114,062 5,669,578 6,922,552
Loss on early extinguishment of
debt.......................... -- 1,676,613 1,676,613 --
Provision for losses on accounts
receivable.................... 24,567 50,071 74,638 159,000
Incentive management fees....... 1,072,463 1,319,160 2,391,623 1,994,910
Deferred interest expense to
partners and affiliates....... 311,571 1,434,969 1,746,540 2,111,138
Changes in operating assets and
liabilities:
Restricted cash and
investments held by bank.. 1,633,434 (3,917,835) (2,284,401) (64,397)
Trade accounts receivable... 440,954 2,122,930 2,563,884 2,045,855
Inventories................. (119,205) 573,668 454,463 35,146
Prepaid expenses and other
current assets............ 211,533 (598,413) (386,880) (554,478)
Trade accounts payable and
advance deposits.......... (4,835,976) (850,538) (5,686,514) (4,303,364)
Accrued interest and other
accrued liabilities....... 221,161 993,761 1,214,922 278,510
Affiliated companies, net... 125,779 (258,254) (132,475) (716,776)
------------- ------------- ------------- -----------
Net cash provided by (used in)
operating activities.............. 4,754,695 2,421,296 7,175,991 2,827,608
INVESTING ACTIVITIES
Purchases of property and
equipment......................... (272,876) (5,709,634) (5,982,510) (869,134)
(Purchases) usage of operating
equipment, net.................... (49,885) 40,051 (9,834) 3,648
------------- ------------- ------------- -----------
Net cash used in investing
activities........................ (322,761) (5,669,583) (5,992,344) (865,486)
FINANCING ACTIVITIES
Payments of principal on long-term
debt.............................. (387,929) (1,337,549) (1,725,478) (273,359)
Proceeds from notes payable to
bank.............................. -- 90,000,000 90,000,000 --
Payments of principal on notes
payable to bank................... (2,000,000) (124,000,000) (126,000,000) (2,006,050)
Payment of loan extension costs.... -- (700,324) (700,324) --
Proceeds from partners', affiliated
loans, and capital
contributions..................... -- 37,009,401 37,009,401 --
------------- ------------- ------------- -----------
Net cash (used in) provided by
financing activities.............. (2,387,929) 971,528 (1,416,401) (2,279,409)
------------- ------------- ------------- -----------
Net increase (decrease) in cash.... 2,044,005 (2,276,759) (232,754) (317,287)
Cash at beginning of period........ 1,128,177 3,172,182 1,128,177 1,048,357
------------- ------------- ------------- -----------
Cash at end of period.............. $ 3,172,182 $ 895,423 $ 895,423 $ 731,070
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
Supplemental disclosure of cash
flow information:
Interest paid...................
Supplemental schedule of noncash
investing activities:
Equipment transferred from an
affiliate
</TABLE>

See accompanying notes.

F-12

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. ORGANIZATION AND PRINCIPAL ACCOUNTING POLICIES

ORGANIZATION

El Conquistador Partnership L.P. (the Partnership), is a limited
partnership organized under the laws of Delaware, pursuant to a Joint Venture
Agreement dated January 12, 1990, as amended (the Agreement). The Partnership is
50% owned by WKA El Con Associates (WKA El Con), a partnership owned by several
partners affiliated with Williams Hospitality Group Inc. (Williams Hospitality),
and 50% owned by Kumagai Caribbean, Inc. (Kumagai), a wholly-owned subsidiary of
Kumagai International USA, Inc. The joint venture partners (the Partners) are
both General Partners and Limited Partners in the Partnership (see Note 14). The
Partnership shall continue to exist until March 31, 2030, unless terminated
earlier by mutual agreement of the General Partners. The Agreement provides that
net profits or losses of the Partnership after deducting a preferred cumulative
annual return of 8.5% on the Partners unrecovered capital accounts, as defined,
will be allocated to the Partners on a 50-50 ratio subject to certain
exceptions, as defined.

The Partnership owns and operates a luxury resort hotel and casino in
Fajardo, Puerto Rico (the Resort).

CHANGE IN FISCAL YEAR

The Partnership changed its fiscal year from March 31 to December 31
beginning with the period ended December 31, 1997.

BASIS OF PRESENTATION

The financial statements have been prepared in conformity with generally
accepted accounting principles which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The financial information contained herein relating to the Partnership's
statement of operations and cash flows for the nine months ended September 30,
1998 is presented separately for the periods through 'February 28 and from
March 1' due to the new basis of accounting which resulted from the acquisition
of the Partnership (see Note 14).

INTERIM INFORMATION (UNAUDITED)

The interim financial statements as of September 30, 1998 and 1997, and as
of December 31, 1996 and for the nine month period ended September 30, 1998 and
1997, and the nine month period ended December 31, 1996, included herein are
unaudited. Such information reflects all adjustments consisting solely of normal
recurring adjustments, which are in the opinion of management necessary for a
fair presentation of the balance sheets as of September 30, 1998 and 1997, and
as of December 31, 1996 and the results of operations, and cash flows for the
nine month period ended September 30, 1998 and 1997, and the nine month period
ended December 31, 1996. Due to the seasonality of the Partnership's business,
the reported results are not necessarily indicative of those expected for the
entire year. Certain information and disclosures normally included in annual
financial statements in accordance with generally accepted accounting principles
have been excluded or omitted in presentation of the interim financial
statements.

F-13

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

INVENTORIES

Inventories, which consist mainly of food, beverages and supplies, are
valued at the lower of cost (first-in, first-out method) or market.

LAND, BUILDING AND EQUIPMENT

Land, building and equipment are stated on the basis of cost. Building and
equipment are depreciated by the straight-line method over their estimated
useful lives. Building is depreciated over a 50 year period. Equipment is
depreciated over a period ranging from five to seven years.

DEFERRED DEBT ISSUANCE COSTS

DEFERRED PRE-OPENING COSTS

Pre-opening costs consist of amounts incurred in connection with the
marketing, organization, planning and development of the Resort. Such costs
include staffing, marketing, legal and other costs incurred prior to the
commencement of operations of the Resort. The costs are being amortized on a
straight-line basis over a five year period through November 1998.

GOODWILL

Goodwill represents the excess of the purchase price over the amount
assigned to net assets acquired and is being amortized over 20 years by the
straight-line method. At each balance sheet date the Partnership evaluates the
realizability of goodwill based on expectations of non-discounted cash flows or
whenever events or changes in circumstances indicate that it may not be
recoverable.

CASINO REVENUES

Casino revenues are the net win from gaming activities, which is the
difference between gaming wins and losses.

CASINO PROMOTIONAL ALLOWANCES

Casino promotional allowances represent the retail value of complimentary
rooms, food, beverage and hotel services furnished to patrons.

OTHER INCOME

Other income includes revenues from telephone, golf and tennis,
transportation and miscellaneous income.

F-14

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

2. RESTRICTED CASH AND INVESTMENTS HELD BY BANK

Pursuant to the terms of the bond agreement (see Note 8), the Partnership
had cash and investments on deposit with the trustee for the following:

<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1997 1997
---------- ------------
<S> <C> <C>
Interest due February 1, 1998.............................................. $1,773,000
Interest due May 1, 1997 and 1998.......................................... $1,778,961 1,707,539
Interest due August 1, 1997................................................ 1,581,646 --
---------- ------------
$3,360,607 $3,480,539
---------- ------------
---------- ------------
</TABLE>

3. TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable consisted of the following:

<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1997 1997
---------- ------------
<S> <C> <C>
Trade accounts receivable -- hotel......................................... $4,559,108 $5,580,876
Less allowance for doubtful accounts....................................... 144,615 234,614
---------- ------------
4,414,493 5,346,262
Trade accounts receivable -- casino........................................ 474,614 616,954
Less allowance for doubtful accounts....................................... 124,500 111,822
---------- ------------
350,114 505,132
---------- ------------
Trade accounts receivable, net............................................. $4,764,607 $5,851,394
---------- ------------
---------- ------------
</TABLE>

4. TRANSACTIONS WITH RELATED PARTIES

The Partnership has an Operating and Management Agreement (the Management
Agreement) with Williams Hospitality. The Management Agreement provides that
Williams Hospitality will manage the Resort for a period of 20 years for a basic
management fee of 3.5% of the Resort's gross revenues, as defined, and an
incentive management fee of 10% of the Resort's operating profit, as defined.
Incentive management fees accrued each year are not payable until significant
cash flow levels are achieved. In addition, the Partnership is required to pay
certain administrative expenses incurred by Williams Hospitality in connection
with management of the Resort.

During each of the two years in the period ended March 31, 1997 and the
nine month period ended December 31, 1997, basic management fees amounted to
$3,305,000, $3,170,000 and $2,125,000, respectively. Incentive management fees
amounted to approximately $2,376,000, $2,224,000 and $860,000 during each of the
two years in the period ended March 31, 1997 and the nine month period ended
December 31, 1997, respectively. In addition, Williams Hospitality charged the
Partnership approximately $3,258,000, $2,728,000 and $83,000 during each of the
two years in the period ended March 31, 1997 and the nine month period ended
December 31, 1997, respectively, for services provided to the Resort.

In addition, the Partnership was charged by Posadas de Puerto Rico
Associates, Incorporated (Posadas de Puerto Rico), hotel and casino operations
affiliated through common ownership, approximately $410,000, $437,000 and
$32,000 during each of the two years in the period ended March 31, 1997 and the
nine month period ended December 31, 1997, respectively, for services provided
to the Resort.

As of December 31, 1997 each partner had advanced $8,765,685 to the
Partnership under notes that are due for various periods up to ten years with
interest at the Citibank, N.A. in New

F-15

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

York base rate. Repayment of interest and principal is subordinate to other
long-term debt. In addition, each partner had advanced to the Partnership
$4,000,000 under a May 5, 1992 loan agreement. The loan agreement provides for
the payment of interest at a variable rate, computed quarterly, equal to LIBOR
plus 1.75% (7.46% at December 31, 1997). Interest payments will be deferred
during the first five years. The principal and deferred interest accrued at
December 31, 1997 is payable in quarterly installments of $250,000 commencing in
March 2000 and a final lump-sum payment in February 2002. The loan is
collateralized by a subordinated pledge of the Partnership's assets.

As of December 31, 1997 each partner had provided $3,800,000 to cover cash
flow deficiencies in the Partnership's operations as provided by the Agreement.
The deficiency loans consist of $3,800,000 in cash by Kumagai, and the
conversion of amounts due from the Partnership to Williams Hospitality to loans
for WKA El Con. The deficiency loans bear interest at 9.16%. Repayment of
interest and principal is subordinated to other long-term debt.

During 1993, the Partnership advanced approximately $2,000,000 to Williams
Hospitality for the purchase of transportation equipment leased to the
Partnership under a five year service agreement. Service agreement payments by
the Partnership are equal to the $39,819 monthly amounts receivable under the
advance. Repayment of the advances by Williams Hospitality are limited to
amounts payable under the service agreement. During the nine month period ended
December 31, 1997, Williams Hospitality transferred the transportation equipment
to the Partnership. The Partnership then sold the transportation equipment at a
loss of approximately $70,000 and the proceeds of this transaction remains to be
collected from Williams Hospitality.

In addition, a subsidiary of Williams Hospitality financed other
transportation equipment from an external borrowing amounting to $441,000
repayable over five years. Monthly payments amount to $9,699. Also, in February
1997, a subsidiary of Williams Hospitality financed a ferryboat from an external
borrowing amounting to $456,000, repayable over seven years. Monthly payments
amount to $7,561. The Partnership chartered the transportation equipment and
ferryboat under terms similar to the transaction described in the preceding
paragraph.

5. NOTES PAYABLE TO BANK

On October 4, 1996 the Partnership entered into an amendment to a loan
agreement whereby the Government Development Bank for Puerto Rico (GDB) extended
the Partnership a $6,000,000 credit facility. The notes issued under the credit
facility bear interest at 1% over LIBOR. The notes are secured by a mortgage
note on the Partnership's real property and a leasehold mortgage note on leased
land and a lien on accounts receivable (see Note 8). At December 31, 1997 the
Partnership had outstanding borrowings of $6,000,000 with an interest rate at
December 31, 1997 of 6.80%.

6. DUE TO AFFILIATED COMPANIES AND PARTNERS

Amounts due to affiliated companies consist of fees earned by Williams
Hospitality, funds advanced to the Partnership and other payments made by
Williams Hospitality, and for services rendered by Posadas de Puerto Rico and
Posadas de San Juan Associates. Amounts due to affiliated companies consisted of
the following:

F-16

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
----------- ------------
<S> <C> <C>
Current:
Due to Williams Hospitality:
Basic management fees................................ $ 435,309 $ 746,659
Other................................................ 83,891 167,314
Due to Posadas de Puerto Rico............................. 26,624 58,713
----------- ------------
$ 545,824 $ 972,686
----------- ------------
----------- ------------
Non current:
Affiliate:
Due to Williams Hospitality:
Incentive management fees....................... $ 5,542,528 $ 6,402,571
Interest at 10% on incentive management fees.... 338,405 676,592
Advances........................................ 3,800,000 1,500,000
Interest on advances............................ 856,282 852,076
Other........................................... 375,528 375,529
----------- ------------
10,912,743 9,806,768
Due to KG Caribbean....................................... 579,234 579,234
----------- ------------
$11,491,977 $ 10,386,002
----------- ------------
----------- ------------
Partners:
Due to WKA El Con:
Advances............................................. $12,765,685 $ 15,065,684
Interest on advances................................. 3,594,886 4,430,554
Due to Kumagai:
Advances............................................. 16,565,685 16,565,683
Interest on advances................................. 4,451,168 5,282,630
----------- ------------
$37,377,424 $ 41,344,551
----------- ------------
----------- ------------
</TABLE>

7. CHATTEL MORTGAGES AND CAPITAL LEASE OBLIGATIONS

Chattel mortgages and capital lease obligations on equipment consisted of
the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
---------- ------------
<S> <C> <C>
Chattel mortgage notes payable bearing interest at 9%, payable in
monthly installments of $215,784, including interest, through
October 1998, collateralized with personal property............ $3,868,202 $1,675,855
Capital lease obligations bearing interest at 11.5%, payable in
monthly installments of $28,335, including interest, through
July 1998, collateralized with personal property............... 471,657 217,208
---------- ------------
4,339,859 1,893,063
Less current portion............................................. 2,679,819 1,893,063
---------- ------------
$1,660,040 $ --
---------- ------------
---------- ------------
</TABLE>

F-17

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

8. LONG-TERM DEBT

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
------------ ------------
<S> <C> <C>
Industrial Revenue Bonds Series A............................ $ 90,000,000 $ 90,000,000
Industrial Revenue Bonds Series B............................ 30,000,000 30,000,000
Government Development Bank for Puerto Rico.................. 25,000,000 25,000,000
------------ ------------
145,000,000 145,000,000
Less current portion......................................... 120,000,000 120,000,000
------------ ------------
$ 25,000,000 $ 25,000,000
------------ ------------
------------ ------------
</TABLE>

On February 7, 1991 the Puerto Rico Industrial, Tourist, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority
(the Authority) sold industrial revenue bonds (Bonds) for $120,000,000 and
loaned the proceeds to the Partnership to be used for the payment of project
costs pursuant to a Loan Agreement. The Loan Agreement provides that the
Partnership will pay all interest and principal on the Bonds.

The Authority issued 1991 Series A, Industrial Revenue Bonds for
$90,000,000 and 1991 Series B, Industrial Revenue Bonds for $30,000,000.

Commencing on May 1, 1996, the Bonds are subject to redemption at the
Partnership's option at par plus accrued interest, if any. The Bonds are due on
November 1, 1999 and interest is payable quarterly. The 1991 Series A Bonds and
the 1991 Series B Bonds bear interest at a variable rate, computed quarterly,
equal to 100% and 94%, respectively, of a LIBOR rate minus 1/8th of 1%
(5.2875%). Effective November 1, 1996, the interest rate on the 1991 Series A
Bonds increased to 100% of the LIBOR rate (5.625%). On February 7, 1991 the
Partnership entered into an Interest Rate Swap Agreement that expires on March
8, 1998 by which the Partnership agreed to pay, effective May 1, 1991, a fixed
rate of 7.55% on the outstanding principal of $120,000,000 in exchange for the
counterparty's obligation to pay the variable interest rate equal to 86% and 94%
respectively, of the LIBOR rate minus 1/8th of 1% (5.2875%).

The Loan Agreement provides that the Partnership will deposit with the
trustee all interest which will become due not later than the 124th day
preceding the date of payment. The Bonds are collateralized by a letter of
credit, that terminates on September 9, 1998, issued by The Bank of
Tokyo -- Mitsubishi Ltd., (formerly The Mitsubishi Bank, Limited) (see Note 14).

As of December 31, 1997 the Partnership pays an annual letter of credit fee
of approximately 1.25% of the Bond principal except under certain circumstances
the rate may be reduced to 1.2%. In addition, in connection with the letter of
credit the Partnership pays an annual agent's fee of approximately .25% of the
Initial Stated Amount, as defined.

Under the provisions of a term loan agreement with GDB, the Partnership
borrowed $25,000,000 for the payment of project costs. The loan is due on
February 7, 2006. The loan agreement provides for a variable interest rate
equivalent to a LIBOR rate minus .5% plus 1.40% (6.70%) as provided in the loan
agreement. Interest is payable quarterly in arrears.

Commencing on April 1, 1993, the Partnership has been required to deposit
annually with an escrow agent 50% of the Available Cash Flow, as defined in the
Loan Agreement with GDB, up to a maximum of $1,666,700 plus any prior year
requirement in arrears. Through December 31, 1997, there had been no amounts
deposited in escrow under this provision.

F-18

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

subordination agreement in favor of the The Bank of Tokyo -- Mitsubishi Ltd.,
(formerly The Mitsubishi Bank, Limited).

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board Statement No. 107 'Disclosures About
Fair Value of Financial Instruments', requires the disclosure of the fair value
of the Partnership's financial instruments at March 31 and December 31, 1997.
The carrying amount of cash and investments, notes payable to bank, chattel
mortgage notes and capitalized leases approximates fair value because of the
short maturity of the instruments or recent issuance. The fair value of the
Partnership's long-term debt has not been determined because similar terms and
conditions may no longer be available.

10. INCOME TAXES

The Partnership is not taxable for Puerto Rico income tax purposes pursuant
to an election submitted to the Puerto Rico Treasury Department. Instead, each
Partner reports their distributive share of the Partnership's profits and losses
in their respective income tax returns and, therefore, no provision for income
taxes has been made in the accompanying financial statements.

The Partnership was granted a tax exemption grant under the provisions of
the Puerto Rico Tourism Incentives Act of 1993 (the Tourism Act). The Tourism
Act provides for a ten-year grant which may be extended for an additional
ten-year term. Major benefits of this Act are: a 90% exemption from income taxes
on hotel income, and a 90% exemption from municipal real and personal property
taxes through the entire term of the grant. The Partnership's casino operations
are not covered by the tax exemption grant and are fully taxable.

11. ADVERTISING COSTS

The Partnership recognizes the costs of advertising as expense in the year
in which they are incurred. Advertising costs amounted to approximately
$1,446,000, $847,000 and $1,430,000 for each of the two years in the period
ended March 31, 1997 and the nine month period ended December 31, 1997,
respectively.

12. COMMITMENTS

The Partnership leases land under an operating lease agreement for
thirty-two years with renewal options for two five-year periods. Following are
the minimum annual rental payments on the operating lease subsequent to December
31, 1997:

<TABLE>
<S> <C>
1998.................................................................. $ 210,000
1999.................................................................. 210,000
2000.................................................................. 210,000
2001.................................................................. 210,000
2002.................................................................. 240,000
Thereafter............................................................ 5,680,000
----------
$6,760,000
----------
----------
</TABLE>

On May 4, 1998, the Partnership entered into a $2,993,000 contract for the
construction of the spa facilities at an existing building. Monthly progress
payments are due by the fifteenth of each month, with a final payment upon
substantial completion of the construction.

F-19

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

Total rent expense for each of the two years in the period ended March 31,
1997 and the nine month period ended December 31, 1997 amounted to approximately
$1,391,000, $985,000, and $982,000, respectively.

13. EMPLOYEES' SAVINGS PLAN

Effective January 1, 1997, the Partnership adopted an employees' savings
plan for all hourly employees after one year of service or 1,000 hours.
Employees covered by any collective bargaining agreement are not eligible to
participate in the plan. Members of the plan can contribute an unlimited
percentage of their after tax compensation. The Partnership's contribution is
$300 per employee per year and a discretionary additional contribution.

The Partnership's contribution to the savings plan amounted to
approximately $44,000 for the nine month period ended December 31, 1997.

Effective January 1, 1997, the Partnership adopted a salary savings plan
for all salaried employees after one year of service or 1,000 hours. Employees
covered by any collective bargaining agreement are not eligible to participate
in the plan. The plan is subject to the provisions of the Employee Retirement
Income Security Act of l974 (ERISA) and Section 1l65(e) of the Puerto Rico
Income Tax Act of l994, as amended. For the nine month period ended December 31,
1997, the employee's contribution was limited to $7,500 or 10% of their
compensation, whichever was less. Under the provisions of the plan, the
Partnership makes a minimum base contribution of $300 per participant plus a
discretionary contribution based on sick leave accrued in excess of 240 hours
and matches the employee's contribution based on the percentage the gross
operating profit, as defined, exceeds the Partnership's annual operating budget
as follows:

<TABLE>
<CAPTION>
MATCHING
G.O.P. EXCEEDS CONTRIBUTION
BUDGET BY PERCENTAGE
- ---------------------------------------------------------------------- ------------
<S> <C>
Less than 5%.......................................................... 25%
5%.................................................................... 35%
10%................................................................... 45%
15%................................................................... 55%
20%................................................................... 65%
</TABLE>

The Partnership's contribution to the salary savings plan amounted to
approximately $29,100 for the nine month period ended December 31, 1997.

14. SUBSEQUENT EVENTS

On January 16, 1998, Patriot American Hospitality Operating Company
Acquisition Subsidiary, a wholly-owned subsidiary of Wyndham International, Inc.
(Wyndham) merged with and into WHG Resorts & Casinos Inc. (WHG), a 46.54%
indirect owner of WKA El Con. As part of the transaction WHG stockholders
received for each issued and outstanding share of common stock .784 shares of
Wyndham and Patriot American Hospitality, Inc. (Patriot), a self-administered
REIT, which trade as 'Paired Shares' on the New York Stock Exchange.

On March 31, 1998, Patriot acquired an additional 50% interest in the
Partnership for approximately $22,728,000, which interest was owned by Kumagai,
and an additional 37.23% interest in WKA El Con for approximately $16,072,000.

On July 13, 1998, Patriot acquired the remaining additional interest in WKA
El Con for approximately $3,890,000. The purchase transactions were accounted
for under the purchase

F-20

EL CONQUISTADOR PARTNERSHIP L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997

method and the cumulative purchase price paid by Wyndham and Patriot was the
basis used to record net assets on the records of WHG and its subsidiaries.

The Bonds amounting to $120,000,000 at December 31, 1997 are collaterized
by a letter of credit which expires on September 9, 1998. Under the terms of the
loan agreement, such debt was required to be repaid on August 3, 1998 since the
letter of credit was not renewed or replaced prior to June 9, 1998 (see Note 8).
On August 3, 1998, the letter of credit was honored and the $120,000,000 was
paid in full. In accordance with the Letter of Credit and Reimbursement
Agreement, the Partnership was obligated to immediately reimburse the letter of
credit issuer the full amount drawn under the letter of credit. On August 3,
1998, the Partnership made a partial payment of $30,000,000 and entered into an
Assignment and Modification Agreement of the Letter of Credit and Reimbursement
Agreement with Citicorp Real Estate, Inc. (CRE). CRE reimbursed the letter of
credit issuer with respect to the $90,000,000 balance due under the Letter of
Credit and Reimbursement Agreement. All fees with respect to the letter of
credit terminated on August 3, 1998. Additionally, CRE became successor in
interest to the collateral liens which were in favor of The Bank of
Tokyo-Mitsubishi, Ltd. (formerly The Mitsubishi Bank, Limited) on such date. As
part of the Assignment and Modification Agreement, the $90,000,000 advanced by
CRE matures on November 3, 1998, with an additional extension option up to
March 15, 1999, if certain conditions are met. Interest on the $90,000,000 is
payable at a rate equal to 7.91% per annum up to September 1, 1998 and at a rate
equal to LIBOR plus 225 basis point up to maturity (7.75% as of November 30,
1998). The $30,000,000 used for the partial payment of the letter of credit was
obtained from a cash advance received from Posadas de Puerto Rico, an affiliate
company through common ownership. In connection with the repayment of the
long-term debt the Partnership recorded an extraordinary loss of approximately
$1,700,000 related to the write-off of the unamortized deferred debt issuance
costs.

The Partnership is engaged in the process of refinancing the balance due to
CRE through a new bond issue by the Authority. Based on operating history of the
Resort, the Partnership's management believes such refinancing will be achieved,
but there can be no assurance thereof. If such refinancing is not obtained, it
raises substantial doubt about the Partnership's ability to continue as a
going-concern.

On September 21 and 22, 1998, Hurricane Georges affected Puerto Rico and
caused certain damage to the Resort. The financial effects of the physical
damage caused by the hurricane are estimated at $36,000,000, however, the
Partnership believes that the nature of the damage and its insurance coverage is
such that there will not be a significant impact on the Partnership's financial
condition.

On November 3, 1998, the Partnership and CRE amended the Assignment and
Modification Agreement to provide for a maturity date of January 29, 1999.

15. IMPACT OF YEAR 2000 -- UNAUDITED

The Partnership has developed a plan to modify its information technology
to be ready for the year 2000 and has begun converting critical data processing
systems. The Partnership expects the project to be substantially completed by
1999. The Partnership does not expect this project to have significant effect on
its operations.

F-21

PURCHASERS OF THE BONDS ARE NOT ACQUIRING ANY INTEREST IN,
OR SECURITIES OF, WKA EL CON ASSOCIATES

WKA EL CON ASSOCIATES
UNAUDITED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash............................................................................... $ 899,100
Restricted cash and investments held by bank....................................... 5,764,900
Trade accounts receivable, less allowance for doubtful accounts of $248,000........ 3,212,900
Inventories........................................................................ 1,218,800
Prepaid expenses and others current assets......................................... 2,110,300
------------
Total current assets.......................................................... 13,206,000
Land, building and equipment:
Land............................................................................... 20,255,500
Building........................................................................... 191,746,200
Furniture, fixture and equipment................................................... 21,141,000
Construction in progress........................................................... 2,491,400
------------
235,634,100
Less accumulated depreciation...................................................... 3,341,700
------------
232,292,400
Operating equipment, net................................................................ 1,451,700
Deferred debt issuance costs and other assets, net of accumulated amortization of
$634,070.............................................................................. 734,400
Capitalized interest net of accumulated amortization of $54,800......................... 1,242,100
Goodwill, net of accumulated amortization of $140,100................................... 6,974,500
------------
Total assets.................................................................. $255,901,100
------------
------------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Trade accounts payable............................................................. $ 5,068,100
Advance deposits................................................................... 5,346,800
Accrued interest................................................................... 1,026,300
Other accrued liabilities.......................................................... 6,890,100
Due to affiliated companies........................................................ 32,909,800
Note payable....................................................................... 90,000,000
Current portion of chattel mortgages and capital lease obligations................. 167,600
------------
Total current liabilities..................................................... 141,408,700
Long-term debt.......................................................................... 25,000,000
Due to affiliated companies............................................................. 16,869,400
Due to partners......................................................................... 5,672,900
Minority interest....................................................................... 32,246,300
Partners' capital:
Contributed........................................................................ 34,786,800
Accumulated deficit................................................................ (83,000)
Total partners' capital................................................................. 34,703,800
------------
Total liabilities and partners' capital....................................... $255,901,100
------------
------------
</TABLE>

See accompanying notes.

F-22

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998

1. ORGANIZATION AND PRINCIPAL ACCOUNTING POLICIES

ORGANIZATION

WKA El Con Associates (the Partnership) is a joint venture organized under
the General Partnership Law of the State of New York, pursuant to a Joint
Venture Agreement (the Agreement) dated January 9, 1990, as amended, for the
purpose of becoming a general and limited partner of El Conquistador Partnership
L.P. (El Con). The Partnership is owned 46.54% by WHG El Con Corp., a wholly
owned subsidiary of Wyndham International, Inc. (Wyndham), 37.23% by
Conquistador Holding Inc., a wholly owned subsidiary of, Patriot American
Hospitality, Inc. (Patriot) and 16.23% by Hospitality Investor Group, S.E. The
Partnership shall continue to exist until January 9, 2040, unless terminated
earlier pursuant to the Agreement (see Note 14).

The consolidated balance sheet includes the accounts of El Conquistador
Partnership L.P. (El Con), a limited partnership organized under the laws of
Delaware, pursuant to a Joint Venture Agreement dated January 12, 1990, as
amended (the Agreement). El Con is 50% owned by the Partnership and 50% owned by
Conquistador Holding, Inc. The joint venture partners (Partners) are both
General Partners and Limited Partners in the Partnership (see Note 14). By
agreement between Wyndham and Patriot, the Partnership's interest is the
controlling 50% interest in El Con. The Partnership shall continue to exist
until March 31, 2030, unless terminated earlier by mutual agreement of the
General Partners.

El Con owns a luxury resort hotel and casino in Fajardo, Puerto Rico (the
Resort).

The Partnership is a 50% limited partner in Las Casitas Development Company
I, S en C (S.E.) (Las Casitas), a joint venture that constructed and sold
condominiums on property adjacent to El Con.

BASIS OF PRESENTATION

The consolidated balance sheet has been prepared in conformity with
generally accepted accounting principles which requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the balance sheet. Actual results could differ from those estimates.

The consolidated balance sheet information at September 30, 1998 includes
all adjustments (consisting of normal recurring adjustments) management
considers necessary for fair presentation of the consolidated balance sheet at
September 30, 1998.

On July 13, 1998, Patriot acquired the remaining additional interest in the
Partnership for approximately $3,890,000. The purchase transactions were
accounted for under the purchase method and the cumulative purchase price paid
by Wyndham and Patriot was the basis used to record net assets on the records of
its subsidiaries.

As part of the acquisition by Wyndham and Patriot, accounted for under the
purchase method, the Partnership's investment in El Con was increased by
approximately $45,261,000 and pre-opening costs were decreased by approximately
$636,000.

INVENTORIES

Inventories, which consist mainly of food, beverages and supplies, are
valued at the lower of cost (first-in, first-out method) or market.

F-23

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

LAND, BUILDING AND EQUIPMENT

DEFERRED DEBT ISSUANCE COSTS AND OTHER ASSETS

Debt issuance costs include legal and underwriting fees, other fees
incurred in connection with the financing and other costs. These costs are being
amortized on a straight-line basis over the term of the debt. Certain other
capital costs related to El Con were incurred by the Partnership and are being
amortized over 50 years.

GOODWILL

Goodwill represents the excess of the purchase price over the amount
assigned to net assets acquired and is being amortized over 20 years by the
straight-line method. At each balance sheet date El Con evaluates the
realizability of goodwill based on expectations of non-discounted cash flows
or whenever events or changes in circumstances indicate that it may not be
recoverable.

2. RESTRICTED CASH AND INVESTMENTS HELD BY BANK

Pursuant to the terms of the Assignment and Modification Agreement of the
Letter of Credit Agreement (see Note 8), El Con had cash and investments on
deposit amounting to approximately $5,765,000 for the payment of interest and
property taxes.

3. TRADE ACCOUNTS RECEIVABLE

At September 30, 1998, trade accounts receivable consisted of the
following:

<TABLE>
<S> <C>
Trade accounts receivable -- hotel.............................................. $3,373,500
Less allowance for doubtful accounts............................................ 172,500
----------
3,201,000
Trade accounts receivable -- casino............................................. 87,400
Less allowance for doubtful accounts............................................ 75,500
----------
11,900
----------
Trade accounts receivable, net.................................................. $3,212,900
----------
----------
</TABLE>

4. TRANSACTIONS WITH RELATED PARTIES

El Con has an Operating and Management Agreement (the Management with
Agreement) with Williams Hospitality Group Inc. (Williams Hospitality). The
Management Agreement provides that Williams Hospitality will manage the Resort
for a period of 20 years for a basic management fee of 3.5% of the Resort's
gross revenues, as defined, and an incentive management fee of 10% of the
Resort's operating profit, as defined. Incentive management fees accrued each
year are not payable until significant cash flow levels are achieved. In
addition, El Con is required to pay certain administrative expenses incurred by
Williams Hospitality in connection with management of the Resort.

A subsidiary of Williams Hospitality, a related entity through common
ownership, financed certain transportation equipment from an external borrowing
amounting to $441,000 repayable over five years. Monthly payments amount to
$9,699. Also, in February 1997, a subsidiary of Williams Hospitality financed a
ferryboat from an external borrowing amounting to $456,000, repayable over seven
years. Monthly payments amount to $7,561.

F-24

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

5. DUE TO AFFILIATED COMPANIES AND PARTNERS

Amounts due to affiliated companies consist of fees earned by Williams
Hospitality, funds advanced to El Con and other payments made by Williams
Hospitality, and for services rendered by Posadas de Puerto Rico Associates,
Incorporated (Posadas de Puerto Rico) and Posadas de San Juan Associates. At
September 30, 1998 amounts due to affiliated companies consisted of the
following:

<TABLE>
<S> <C>
Current:
Due to Williams Hospitality:
Basic management fees.......................................................... $ 301,900
Other.......................................................................... 169,300
Due to Posadas de Puerto Rico....................................................... 32,414,900
Due to Posadas de San Juan Associates............................................... 23,700
-----------
$32,909,800
-----------
-----------
Non current:
Affiliate:
Due to Williams Hospitality:
Incentive management fees................................................. $ 8,794,200
Interest at 10% on incentive management fees.............................. 1,112,800
Advances.................................................................. 1,500,000
Interest on advances...................................................... 958,300
Other..................................................................... 43,700
-----------
12,409,000
Due to Patriot................................................................. 4,460,400
-----------
$16,869,400
-----------
-----------
</TABLE>

At various times, the partners loaned the Partnership $8,229,700 under the
terms of loan agreements. The notes are payable in 2003 to 2005 and bear
interest at the prime rate commencing on various dates. The Partnership has
advanced the same amount under a subordinated note to El Con under the same
terms as the borrowing from the partners. The interest rate as of September 30,
1998 was 8.25%.

The Partnership guaranteed a revolving credit facility from GDB to El Con
in the aggregate amount of up to $6,000,000. The revolving credit facility was
terminated in May 1998.

6. CHATTEL MORTGAGES AND CAPITAL LEASE OBLIGATIONS

At September 30, 1998, chattel mortgages and capital lease obligations on
equipment consisted of a chattel mortgage note payable bearing interest at 9%,
payable in monthly installments of $215,784, including interest, through October
1998, collateralized with personal property with a balance of $167,600.

7. LONG-TERM NOTE PAYABLE

The note is payable in quarterly installments of $250,000 commencing in May
2000. Any unpaid principal and interest is payable in May 2002. The note bears
interest at a variable rate, computed quarterly, equal to LIBOR, plus 1.75%,
interest rate at September 30, 1998 was 7.5%. Under the terms of the Credit
Facility Agreement dated May 5, 1992, interest payments are deferred during the
first five years. The $4,000,000 borrowing was loaned to El Con under similar
terms.

F-25

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

The note is collateralized by second mortgages on parcels of land owned by
Williams Hospitality and Posadas de Puerto Rico, affiliated companies through
common ownership, with a cost of approximately $3,761,000, and a guarantee of
$1,000,000 by Wyndham, the ultimate owner of WHG El Con Corp.

8. LONG-TERM DEBT

At September 30, 1998 long-term debt consisted of the following:

<TABLE>
<S> <C>
Government Development Bank for Puerto Rico.................................... $25,000,000
-----------
$25,000,000
-----------
-----------
</TABLE>

On February 7, 1991 the Puerto Rico Industrial, Medical, Educational and
Environmental Pollution Control Facilities Financing Authority (the Authority)
sold industrial revenue bonds (Bonds) for $120,000,000 and loaned the proceeds
to El Con to be used for the payment of project costs pursuant to a Loan
Agreement. The Loan Agreement provides that El Con will pay all interest and
principal on the Bonds.

The Authority issued 1991 Series A, Industrial Revenue Bonds for
$90,000,000 and 1991 Series B, Industrial Revenue Bonds for $30,000,000.

Commencing on May 1, 1996, the Bonds were subject to redemption at El Con's
option at par plus accrued interest, if any. The Bonds are due on November 1,
1999 and interest is payable quarterly. The 1991 Series A Bonds and the 1991
Series B Bonds bear interest at a variable rate, computed quarterly, equal to
100% and 94%, respectively, of a LIBOR rate minus 1/8th of 1%. Effective
November 1, 1996, the interest rate on the 1991 Series A Bonds increased to 100%
of the LIBOR rate. On February 7, 1991 El Con entered into an Interest Rate Swap
Agreement that expired on March 8, 1998 by which El Con agreed to pay, effective
May 1, 1991, a fixed rate of 7.55% on the outstanding principal of $120,000,000
in exchange for the counterparty's obligation to pay the variable interest rate
equal to 86% and 94% respectively, of the LIBOR rate minus 1/8th of 1%.

The Loan Agreement provides that El Con will deposit with the trustee all
interest which will become due not later than the 124th day preceding the date
of payment. The Bonds are collaterilized by a letter of credit, that terminates
on September 9, 1998, issued by The Bank of Tokyo-Mitsubishi Ltd (formerly The
Mitsubishi Bank, Limited). The Loan Agreement required the letter of credit to
be renewed or replaced prior to June 9, 1998 or the debt amounting to
$120,000,000 would become due on August 3, 1998. On August 3, 1998, the letter
of credit was honored and the $120,000,000 was paid in full. In accordance with
the Letter of Credit and Reimbursement Agreement, El Con was obligated to
immediately reimburse the letter of credit issuer the full amount drawn under
the letter of credit. On August 3, 1998, El Con made a partial payment of
$30,000,000 and entered into an Assignment and Modification Agreement of the
Letter of Credit Agreement with Citicorp Real Estate, Inc. (CRE). CRE reimbursed
the letter of credit issuer with respect to the $90,000,000 balance due under
the Letter of Credit and Reimbursement Agreement. As part of the Assignment and
Modification Agreement, the remaining $90,000,000 advance by CRE matured on
November 3, 1998, with an additional extention option up to March 15, 1999, if
certain conditions were met. Interest on the $90,000,000 is payable at a rate
equal to 7.91% per annum up to September 1, 1998 and at a rate equal to LIBOR
plus 225 basis points up to maturity (7.75% as of November 30, 1998). The
$30,000,000 used for the partial payment of the letter of credit was obtained
from a cash advance received from Posadas de Puerto Rico, an affiliate company
through common ownership.

El Con is engaged in the process of refinancing the balance due to CRE
through a new bond issue by the Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control

F-26

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

Facilities Financing Authority. Based on operating history of the Resort, the
Partnership's management believes such refinancing will be achieved, but there
can be no assurance thereof.

El Con pays an annual letter of credit fee of approximately 1.25% of the
Bond principal except under certain circumstances the rate may be reduced to
1.2%. In addition, in connection with the letter of credit El Con pays an annual
agent's fee of approximately .25% of the Initial Stated Amount, as defined.
These fees were terminated as of August 3, 1998 as part of the Assignment and
Modification Agreement.

Under the provisions of a term loan agreement with GDB, El Con borrowed
$25,000,000 for the payment of project costs. The loan is due on February 7,
2006. The loan agreement provides for a variable interest rate equivalent to a
LIBOR rate minus .5% plus 1.40% (6.06%) as provided in the loan agreement.
Interest is payable quarterly in arrears.

Commencing on April 1, 1993, El Con is required to deposit annually with an
escrow agent 50% of the Available Cash Flow, as defined in the Loan Agreement
with GDB, up to a maximum of $1,666,700 plus any prior year requirement in
arrears. Through September 30, 1998, there had been no amounts deposited in
escrow under this provision.

The Bonds and the term loan with GDB are collateralized by a first and
second mortgage lien on the Resort, a chattel mortgage on personal property, and
an assignment of various contracts and the Management Agreement with Williams
Hospitality. The collateral is subject to a subordination agreement in favor of
CRE as successor to The Bank of Tokyo-Mitsubishi Ltd (formerly The Mitsubishi
Bank, Limited) pursuant to the Assignment and Modification Agreement.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board Statement No. 107 'Disclosures About
Fair Value of Financial Instruments', requires the disclosure of the fair value
of El Con's financial instruments at September 30, 1998. The carrying amount of
investments, notes payable to bank, chattel mortgage notes and capitalized
leases approximates fair value because of the short maturity of the instruments
or recent issuance. The fair value of El Con's long-term debt has not been
determined because similar terms and conditions may no longer be available.

10. INCOME TAXES

The Partnership is not taxable for Puerto Rico income tax purposes pursuant
to an election submitted to the Puerto Rico Treasury Department. Instead, each
Partner reports their distributive share of the Partnership's profit and losses
in their respective income tax returns.

El Con was granted a tax exemption grant under the provisions of the Puerto
Rico Tourism Incentives Act of 1993 (the Tourism Act). The Tourism Act provides
for a ten-year grant which may be extended for an additional ten-year term.
Major benefits of this Act are: a 90% exemption from income taxes on hotel
income, and a 90% exemption from municipal real and personal property taxes
through the entire term of the grant. The Partnership's casino operations are
not covered by the tax exemption grant and are fully taxable.

F-27

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

11. COMMITMENTS

El Con leases land under an operating lease agreement for thirty-two years
with renewal options for two five-year periods. Following are the minimum annual
rental payments on the operating lease subsequent to September 30, 1998:

<TABLE>
<S> <C>
1998............................................................................ $ 210,000
1999............................................................................ 210,000
2000............................................................................ 210,000
2001............................................................................ 210,000
2002............................................................................ 240,000
Thereafter...................................................................... 5,515,000
----------
$6,595,000
----------
----------
</TABLE>

On May 4, 1998, El Con entered into a $2,993,000 contract for the
construction of spa facilities at an existing building. Monthly progress
payments are due by the fifteenth of each month, with a final payment upon
substantial completion of the construction.

12. EMPLOYEES' SAVINGS PLAN

Effective January 1, 1997, El Con adopted an employees' savings plan for
all hourly employees after one year of service or 1,000 hours. Employees covered
by any collective bargaining agreement are not eligible to participate in the
plan. Members of the plan can contribute an unlimited percentage of their after
tax compensation. El Con's contribution is $300 per employee per year and a
discretionary additional contribution.

Effective January 1, 1997, El Con adopted a salary savings plan for all
salaried employees after one year of service or 1,000 hours. Employees covered
by any collective bargaining agreement are not eligible to participate in the
plan. The plan is subject to the provisions of the Employee Retirement Income
Security Act of l974 (ERISA) and Section 1l65(e) of the Puerto Rico Income Tax
Act of l994, as amended.

Under the provisions of the plan, El Con makes a minimum base contribution
of $300 per participant plus a discretionary contribution based on sick leave
accrued in excess of 240 hours and matches the employee's contribution based on
the percentage the gross operating profit, as defined, exceeds El Con's annual
operating budget as follows:

<TABLE>
<CAPTION>
MATCHING
CONTRIBUTION
G.O.P. EXCEEDS BUDGET BY PERCENTAGE
- ------------------------ ------------
<S> <C>
Less than 5%.................................................................... 25%
5%.............................................................................. 35%
10%............................................................................. 45%
15%............................................................................. 55%
20%............................................................................. 65%
</TABLE>

13. IMPACT OF YEAR 2000

El Con has developed a plan to modify its information technology to be
ready for the year 2000 and has begun converting critical data processing
systems. El Con expects the project to be substantially completed by 1999. El
Con does not expect this project to have significant effect on its financial
position.

F-28

WKA EL CON ASSOCIATES
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

14. HURRICANE GEORGES

On September 21 and 22, 1998, Hurricane Georges caused certain damage to
the Resort. The financial effects of the physical damage caused by the hurricane
are estimated at $36,000,000, however, management of the Partnership believes
that the nature of the damage and its insurance coverage is such that there will
not be a significant impact on El Con's financial condition.

15. SUBSEQUENT EVENTS

On November 3, 1998, the Partnership and CRE amended the Assignment and
Modification Agreement to provide for a maturity date of January 29, 1999.

F-29

REPORT OF INDEPENDENT AUDITORS

The Partners
WKA EL CON ASSOCIATES

We have audited the accompanying balance sheet of WKA El Con Associates (a
joint venture partnership) as of December 31, 1997. This balance sheet is the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of WKA El Con Associates as of
December 31, 1997 in conformity with generally accepted accounting principles.

The accompanying balance sheet has been prepared assuming that WKA El Con
Associates will continue as a going-concern. As more fully described in Note 7,
El Conquistador Partnership L.P., a 50% owned partnership, did not renew or
replace prior to June 9, 1998 a letter of credit collateralizing $120,000,000 of
indebtedness and the debt was required to be repaid on August 3, 1998. The debt
was partially repaid with proceeds from a short-term loan due on January 29,
1999 and the proceeds of an advance from Posadas de Puerto Rico Associates,
Incorporated, an affiliate of the Partnership. This condition raises substantial
doubt about the Partnership's ability to continue as a going-concern. The
balance sheet does not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and
classifications of liabilities that may result from the outcome of this
uncertainty.

ERNST & YOUNG LLP

San Juan, Puerto Rico
June 11, 1998, except for
the second, third, fifth and sixth paragraphs
of Note 7 as to which the dates
are July 13, August 3, September 21,
and November 3, 1998, respectively

F-30

PURCHASERS OF THE BONDS ARE NOT ACQUIRING ANY INTEREST IN,
OR SECURITIES OF, WKA EL CON ASSOCIATES

WKA EL CON ASSOCIATES
BALANCE SHEET
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Cash.............................................................................................. $ 3,600
Notes receivable from affiliated company.......................................................... 19,096,300
Capitalized interest, less accumulated amortization of $115,000................................... 1,353,500
Deferred debt issuance costs and other assets, less accumulated amortization of $451,300.......... 718,500
------------
Total assets....................................................................... $ 21,171,900
------------
------------

LIABILITIES AND DEFICIENCY IN ASSETS
Liabilities:
Long-term note payable....................................................................... $ 5,526,200
Due to affiliated company.................................................................... 95,700
Due to partners.............................................................................. 10,832,600
Losses in excess of equity investment in:
El Conquistador Partnership L.P......................................................... 19,985,300
Las Casitas Development Company......................................................... 57,400
------------
20,042,700
------------
Total liabilities.................................................................. 36,497,200
Deficiency in assets:
Contributed.................................................................................. 20,286,200
Deficit...................................................................................... (35,611,500)
------------
Total deficiency in assets......................................................... (15,325,300)
------------
Total liabilities and deficiency in assets......................................... $ 21,171,900
------------
------------
</TABLE>

See accompanying notes.

F-31

WKA EL CON ASSOCIATES
NOTES TO THE BALANCE SHEET
DECEMBER 31, 1997

1. ORGANIZATION AND PRINCIPAL ACCOUNTING POLICIES

ORGANIZATION

WKA El Con Associates (the Partnership) is a joint venture organized under
the General Partnership Law of the State of New York, pursuant to a Joint
Venture Agreement (the Agreement) dated January 9, 1990, as amended, for the
purpose of becoming a general and limited partner of El Conquistador Partnership
L.P. (El Con), the owner of El Conquistador Resort & Country Club (the Resort).
The Partnership is owned 46.54% by WHG El Con Corp., which is wholly-owned by
WHG Resorts & Casinos Inc. (WHG), 37.23% by AMK Conquistador, S.E. and 16.23% by
Hospitality Investor Group, S.E. The Partnership shall continue to exist until
January 9, 2040, unless terminated earlier pursuant to the Agreement (see Note
7). Net profits or losses of the Partnership will be allocated to the partners
in accordance with the terms of the Agreement.

The Partnership is a 50% limited partner in Las Casitas Development Company
I, S en C (S.E.) (Las Casitas), a joint venture that constructed and sold
condominiums on property adjacent to the Resort.

CHANGE IN FISCAL YEAR

The Partnership changed its fiscal year from June 30 to December 31
beginning with the period ended December 31, 1997.

BASIS OF PRESENTATION

The balance sheet has been prepared in conformity with generally accepted
accounting principles which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the balance
sheet. Actual results could differ from those estimates.

INVESTMENTS IN AFFILIATED COMPANIES

The investments in affiliated companies are accounted for under the equity
method. The general partners will provide any additional financing requirements.
Capitalized interest is being amortized by the straight-line method over the
estimated useful life of the Resort property.

DEFERRED DEBT ISSUANCE COSTS AND OTHER ASSETS

Deferred debt issuance costs include legal and bank fees incurred in
connection with the issuance of the debt, and are being amortized over the
maturity of the related debt. Certain other capital and pre-opening costs
related to the Resort were incurred by the Partnership and are being amortized
over 5 to 50 years.

2. NOTES RECEIVABLE FROM AFFILIATED COMPANY

At December 31, 1997 notes receivable from El Con consisted of the
following:

<TABLE>
<S> <C>
Note receivable due on demand.................................................. $ 136,000
Note receivable due through May, 2002 (see Note 5)............................. 4,000,000
Subordinated notes receivable due in 2003 to 2005 (see Note 4)................. 8,229,700
Accrued interest receivable.................................................... 4,430,600
Deficiency loan participation.................................................. 2,300,000
-----------
$19,096,300
-----------
-----------
</TABLE>

F-32

WKA EL CON ASSOCIATES
NOTES TO THE BALANCE SHEET -- (CONTINUED)
DECEMBER 31, 1997

Repayment of the notes, including accrued interest, is subordinated to
other long-term debt of El Con.

During the six month period ended December 31, 1997, the Partnership
acquired from Williams Hospitality Group Inc. (Williams Hospitality) an
additional $300,000 of participation in a deficiency loan to El Con. The loan
and interest at 9.16% are payable from specified future cash flow of El Con.

3. INVESTMENT IN AFFILIATED COMPANIES

In 1991, the Partnership borrowed $9,000,000 from Williams Hospitality, a
hotel/casino management company that is an affiliated company and the manager of
the Resort, and invested the proceeds in the partnership capital of El Con, a
joint venture organized to acquire and develop the Resort property. The
Partnership owns a 50% interest, as both a general and limited partner, of El
Con (see Note 4).

Summarized financial information for El Con as of December 31, 1997 is as
follows:

<TABLE>
<S> <C>
Total assets.................................................................. $200,422,000
Total liabilities............................................................. 228,393,000
Deficiency in partners' capital............................................... 27,971,000
</TABLE>

The Partnership's investment in Las Casitas amounts to $5,000.

4. DUE TO AFFILIATED COMPANY AND PARTNERS

At various times, the partners loaned the Partnership $8,229,700 under the
terms of various loan agreements. The notes with respect to such loans are
payable in 2003 to 2005 and bear interest at the prime rate commencing on
various dates. The Partnership has advanced the same amount under a subordinated
note to El Con under the same terms as the borrowing from the partners. The
interest rate as of December 31, 1997 was 8.50% (see Note 2).

The Partnership guarantees a revolving credit facility with a bank in the
aggregate amount of up to $6,000,000 of El Con.

5. LONG-TERM NOTE PAYABLE

The long-term note payable to a bank includes accrued interest of
$1,526,200 at December 31, 1997. The note is payable in quarterly installments
of $250,000 commencing in May 2000. Any unpaid principal and interest is payable
in May 2002. The note bears interest at a variable rate, computed quarterly,
equal to LIBOR, plus 1.75%. The interest rate at December 31, 1997 was 7.5%.
Under the terms of the Credit Facility Agreement dated May 5, 1992, among the
Partnership, Kumagai Caribbean, Inc. and the Government Development Bank for
Puerto Rico interest payments are deferred during the first five years. The
$4,000,000 borrowing was loaned to El Con under similar terms (see Note 2).

The note is collateralized by second mortgages on parcels of land owned by
Williams Hospitality and Posadas de Puerto Rico Associates, Incorporated,
affiliated companies through common ownership, with a cost of approximately
$3,761,000, and a guarantee of $1,000,000 by WHG, the ultimate owner of WHG El
Con Corp.

6. INCOME TAXES

The Partnership is not taxable for Puerto Rico income tax purposes pursuant
to an election submitted to the Puerto Rico Treasury Department. Instead, each
partner reports their distributive

F-33

WKA EL CON ASSOCIATES
NOTES TO THE BALANCE SHEET -- (CONTINUED)
DECEMBER 31, 1997

share of the Partnership's profits or losses in their respective income tax
returns. Profits or losses the Partnership for Federal income tax purposes is
reported by the partners.

7. SUBSEQUENT EVENTS

BUSINESS ACQUISITION

On March 31 and July 13, 1998, Patriot acquired a 37.23% and 16.23%,
respectively, additional interest in the Partnership for approximately
$16,072,000 and $3,890,000, respectively. Patriot subsequently transferred such
interest to Conquistador Holding, Inc., all of the voting stock and 1% of the
equity interest of which is owned by Wyndham and 99% of the equity interest of
which is owned by Patriot. As a result of the acquisition transactions, Patriot
beneficially owns 53.46% of the Partnership and Wyndham beneficially owns 46.54%
of the Partnership. Also, the long-term note payable and due to the partners of
the Partnership was paid in full. In connection with the repayment of the
long-term debt, the Partnership recorded an extraordinary loss of approximately
$99,000 related to the write-off of the unamortized deferred debt issuance
costs. The purchase transactions were accounted for under the purchase method
and the cumulative purchase price paid by Wyndham and Patriot was the basis used
to record net assets in the records of WHG and its subsidiaries.

EL CON REFINANCING

The debt of El Con is collateralized by a letter of credit which expires on
September 9, 1998. The loan agreement requires the letter of credit to be
renewed or replaced prior to June 9, 1998, or the debt amounting to $120,000,000
will become due on August 3, 1998. On August 3, 1998, the letter of credit was
honored and the $120,000,000 was paid in full. In accordance with the Letter of
Credit and Reimbursement Agreement, El Con was obligated to immediately
reimburse the letter of credit issuer the full amount drawn under the letter of
credit. On August 3, 1998, El Con made a partial payment of $30,000,000 and
entered into an Assignment and Modification Agreement of the Letter of Credit
Agreement with Citicorp Real Estate, Inc. (CRE). CRE reimbursed the letter of
credit issuer with respect to the $90,000,000 balance due under the Letter of
Credit and Reimbursement Agreement. As part of the Assignment and Modification
Agreement, the remaining $90,000,000 advanced by CRE matures on November 3,
1998, with an additional extension option up to March 15, 1999, if certain
conditions are met. Interest on the $90,000,000 is payable at a rate equal to
7.91% per annum up to September 1, 1998 and at a rate equal to LIBOR plus 225
basis points up to maturity (7.75% as of November 30, 1998). The $30,000,000
used for the partial payment of the letter of credit was obtained from a cash
advance received from Posadas de Puerto Rico Associates, Incorporated, an
affiliate company through common ownership.

El Con is engaged in the process of refinancing the balance due to CRE
through a new bond issue by the Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority. Based on
operating history of the Resort, the Partnership's management believes such
refinancing will be achieved, but there can be no assurance thereof. If such
refinancing is not obtained, it raises substantial doubt about the Partnership's
ability to continue as a going-concern.

F-34

WKA EL CON ASSOCIATES
NOTES TO THE BALANCE SHEET -- (CONTINUED)
DECEMBER 31, 1997

On November 3, 1998, the Partnership and CRE amended the Assignment and
Modification Agreement to provide for a maturity date of January 29, 1999.

HURRICANE GEORGES

8. IMPACT OF YEAR 2000 -- UNAUDITED

F-35

PURCHASERS OF THE BONDS ARE NOT ACQUIRING ANY INTEREST IN,
OR SECURITIES OF, CONQUISTADOR HOLDING, INC.

CONQUISTADOR HOLDING, INC.
UNAUDITED BALANCE SHEET
SEPTEMBER 30, 1998

<TABLE>
<S> <C>
ASSETS
Cash............................................................................................... $ 101
Investments in unconsolidated subsidiaries......................................................... 33,192,649
-----------
Total assets........................................................................ $33,192,750
-----------
-----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current income tax liability.................................................................. $ --
Deferred tax liabilities...................................................................... --
-----------
Total liabilities................................................................... --
Shareholders' equity
Class A voting common stock, $0.01 par value; 50,000 shares authorized;
100 shares issued and outstanding........................................................... 1
Class B non-voting common stock, $0.01 par value; 50,000 shares authorized; 9,900 shares
issued and outstanding....................................................................... 99
Additional paid-in capital.................................................................... 38,064,946
Retained earnings............................................................................. (3,534,397)
-----------
34,530,649
Less: subscription note receivable............................................................ (1,337,899)
-----------
Total shareholders' equity.......................................................... 33,192,750
-----------
Total liabilities and shareholders' equity.......................................... $33,192,750
-----------
-----------
</TABLE>

See accompanying notes.

F-36

CONQUISTADOR HOLDING, INC.
NOTES TO UNAUDITED BALANCE SHEET
SEPTEMBER 30, 1998

1. ORGANIZATION

Conquistador Holding, Inc. (the 'Company') is owned by Patriot American
Hospitality, Inc. ('PAH') and a subsidiary of Wyndham International, Inc.
('Wyndham'). The Company was incorporated for the purpose of acquiring
partnership interests in El Conquistador Partnership L.P. ('El Con') and WKA El
Con Associates ('WKA'). WKA owns the remaining partnership interests in El Con
while El Con owns the El Conquistador Resort & Country Club located in Fajardo,
Puerto Rico.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS

Effective March 1, 1998, the Company acquired a 50% interest in El Con and
a 37.23% interest in WKA from PAH. The remaining partnership interests of El Con
and WKA are owned by a subsidiary of Wyndham. By agreement between Wyndham and
PAH, WKA's interest is the controlling 50% interest in El Con. Accordingly, the
Company accounts for its investments in El Con and WKA under the equity method.

On July 13, 1998, the Company acquired an additional 16.23% interest in WKA
for approximately $3,890,000.

INCOME TAXES

The Company records its provision for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 ('SFAS 109'). Under the
liability method of SFAS 109, deferred taxes are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using the enacted tax rates in effect in the years the differences
are expected to reverse.

Deferred tax liabilities are primarily a result of tax over book
depreciation.

3. INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS

Investments in unconsolidated partnerships as of September 30, 1998 are as
follows:

<TABLE>
<S> <C>
Investment in El Con.......................................................... $ 20,608,671
Investment in WKA............................................................. 12,583,978
------------
$ 33,192,649
</TABLE>

Summarized unaudited financial information for El Con as of September 30,
1998 is as follows:

<TABLE>
<S> <C>
Total assets.................................................................. $256,560,405
Total liabilities............................................................. 199,457,003
Partners' capital............................................................. 57,103,402
</TABLE>

Summarized unaudited financial information for WKA as of September 30, 1998
is as follows:

<TABLE>
<S> <C>
Total assets.................................................................. $255,901,100
Total liabilities............................................................. 221,197,300
Partners' capital............................................................. 34,703,800
</TABLE>

F-37

CONQUISTADOR HOLDING, INC.
NOTES TO UNAUDITED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

The debt of El Con was collateralized by a letter of credit which expired
on September 9, 1998. On August 3, 1998, the letter of credit was honored and
drawn on. In accordance with the Letter of Credit and Reimbursement Agreement,
El Con is obligated to immediately reimburse the letter of credit issuer the
full $120,000,000 drawn under the letter of credit. On August 3, 1998, El Con
made a partial payment of $30,000,000 and entered into an Assignment and
Modification Agreement of the Letter of Credit Agreement. As part of the such
agreement, the maturity of the remaining $90,000,000 was extended to November 3,
1998, with an additional extension option up to March 15, 1999 available if
certain conditions are met. Interest on the $90,000,000 is payable at a rate
equal to 7.91% per annum up to September 1, 1998 and at a rate equal to LIBOR
plus 225 basis points thereafter (7.75% as of November 30, 1998). The
$30,000,000 used for the partial payment of the letter of credit was obtained in
a cash advanced from Posadas de Puerto Rico Associates, Incorporated, a company
affiliated through common ownership. El Con is engaged in the process of
refinancing the remaining $90,000,000 through a new bond issue. The Company
believes such refinancing will be achieved, but there can be no assurance
thereof. This raises substantial doubt about the Company's ability to continue
as a going-concern.

4. SUBSCRIPTION NOTE RECEIVABLE

Upon incorporation, Wyndham International, Inc., through one of its
subsidiaries, contributed cash of $101 and a note payable to the Company in the
amount of $1,337,899 in exchange for 100 shares of the Company's Class A common
stock.

5. IMPACT OF YEAR 2000

The Company's accounting records are processed by Wyndham who is assessing
the modifications or replacements of its software that may be necessary for its
computer systems to function properly with respect to the dates in the year 2000
and thereafter. Wyndham is presently negotiating with a vendor that is expected
to perform this remediation of Wyndham's systems. The scope and cost of this
work is not yet known at this time. Wyndham believes that the remediation will
be implemented by June 30, 1999.

6. HURRICANE GEORGES

On September 21 and 22, 1998, Hurricane Georges caused certain damage to
the hotel owned by El Con. The financial effects of the physical damage caused
by the hurricane are estimated at $36,000,000, however, the Company believes
that the nature of the damage and insurance coverage is such that there will not
be a significant impact on the Company's financial condition.

7. SUBSEQUENT EVENTS

On November 3, 1998, El Con and Citicorp Real Estate, Inc. amended the
Assignment and Modification Agreement to provide for a maturity date of January
29, 1999.

F-38

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
CONQUISTADOR HOLDING, INC.

We have audited the accompanying balance sheet of Conquistador Holding,
Inc., a Delaware corporation, as of June 30, 1998. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Conquistador Holding, Inc. as of
June 30, 1998, in conformity with generally accepted accounting principles.

The accompanying balance sheet has been prepared assuming that Conquistador
Holding, Inc. will continue as a going-concern. As more fully described in Note
5, El Conquistador Partnership L.P., did not renew or replace prior to June 9,
1998 a letter of credit collateralizing $120,000,000 of indebtedness and such
debt was repaid on August 3, 1998 with proceeds from the letter of credit. The
letter of credit issuer was partially repaid with the proceeds of an advance
from Posadas de Puerto Rico Associates, Incorporated, an affiliate of El
Conquistador Partnership L.P. with the remaining amount due on January 29, 1999.
This condition raises substantial doubt about the Company's ability to continue
as a going-concern. The balance sheet does not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result from
the outcome of this uncertainty.

/S/ ERNST & YOUNG LLP

Dallas, Texas
October 16, 1998, except for the fourth
paragraph of Note 5 as to which
the date is November 3, 1998

F-39

PURCHASERS OF THE BONDS ARE NOT ACQUIRING ANY INTEREST IN,
OR SECURITIES OF, CONQUISTADOR HOLDING, INC.

CONQUISTADOR HOLDING, INC.
BALANCE SHEET
JUNE 30, 1998

<TABLE>
<S> <C>
ASSETS
Cash............................................................................................... $ 101
Investments in unconsolidated subsidiaries......................................................... 35,219,299
-----------
Total assets........................................................................ $35,219,400
-----------
-----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current income tax liability.................................................................. $ 703,207
Deferred tax liabilities...................................................................... 130,582
-----------
Total liabilities................................................................... 833,789
Shareholders' equity
Class A voting common stock, $0.01 par value; 50,000 shares authorized;
100 shares issued and outstanding........................................................... 1
Class B non-voting common stock, $0.01 par value; 50,000 shares authorized; 9,900 shares
issued and outstanding....................................................................... 99
Additional paid-in capital.................................................................... 34,174,946
Retained earnings............................................................................. 1,548,464
-----------
35,723,510
Less: subscription note receivable............................................................ (1,337,899)
-----------
Total shareholders' equity.......................................................... 34,385,611
-----------
Total liabilities and shareholders' equity.......................................... $35,219,400
-----------
-----------
</TABLE>

See accompanying notes.

F-40

CONQUISTADOR HOLDING, INC.
NOTES TO BALANCE SHEET
JUNE 30, 1998

1. ORGANIZATION

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS

INCOME TAXES

Deferred tax liabilities are primarily a result of tax over book
depreciation.

3. INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS

Investments in unconsolidated partnerships as of June 30, 1998 are as
follows:

<TABLE>
<S> <C>
Investment in El Con........................................................... $24,464,171
Investment in WKA.............................................................. 10,755,128
-----------
$35,219,299
-----------
-----------
</TABLE>

Summarized unaudited financial information for El Con as of June 30, 1998
is as follows:

<TABLE>
<S> <C>
Total assets.................................................................. $246,075,784
Total liabilities............................................................. 194,483,623
Partners' capital............................................................. 51,592,161
</TABLE>

Summarized unaudited financial information for WKA as of June 30, 1998 is
as follows:

<TABLE>
<S> <C>
Total assets.................................................................. $247,449,400
Total liabilities............................................................. 207,433,600
Partners' capital............................................................. 40,015,800
</TABLE>

F-41

CONQUISTADOR HOLDING, INC.
NOTES TO BALANCE SHEET -- (CONTINUED)
JUNE 30, 1998

4. SUBSCRIPTION NOTE RECEIVABLE

5. SUBSEQUENT EVENTS

On July 13, 1998, the Company acquired an additional 16.23% interest in WKA
for approximately $3,890,000.

The debt of El Con was collateralized by a letter of credit which expired
on September 9, 1998. On August 3, 1998, the letter of credit was honored and
drawn on. In accordance with the Letter of Credit and Reimbursement Agreement,
El Con is obligated to immediately reimburse the letter of credit issuer the
full $120,000,000 drawn under the letter of credit. On August 3, 1998, El Con
made a partial payment of $30,000,000 and entered into an Assignment and
Modification Agreement of the Letter of Credit Agreement. As part of the such
agreement, the maturity of the remaining $90,000,000 was extended to November 3,
1998, with an additional extension option up to March 15, 1999 available if
certain conditions are met. Interest on the $90,000,000 is payable at a rate
equal to 7.91% per annum up to September 1, 1998 and at a rate equal to LIBOR
plus 225 basis points thereafter. The $30,000,000 used for the partial payment
of the letter of credit was obtained in a cash advanced from Posadas de Puerto
Rico Associates, Incorporated, a company affiliated through common ownership.
El Con is engaged in the process of refinancing the remaining $90,000,000
through a new bond issue. The Company believes such refinancing will be
achieved, but there can be no assurance thereof. This raises substantial
doubt about the Company's ability to continue as a going-concern.

On November 3, 1998, El Con and Citicorp Real Estate, Inc. amended the
Assignment and Modification Agreement to provide for a maturity date of January
29, 1999.

6. IMPACT OF YEAR 2000 -- UNAUDITED

F-42

PURCHASERS OF THE BONDS ARE NOT ACQUIRING ANY INTEREST IN,
OR SECURITIES OF, WHG EL CON CORP.

WHG EL CON CORP.
UNAUDITED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash......................................................................................... $ 899,100
Restricted cash and investments held by bank................................................. 5,764,900
Trade accounts receivable, less allowance for doubtful accounts of $248,000.................. 3,212,900
Inventories.................................................................................. 1,218,800
Prepaid expenses and others current assets................................................... 2,110,300
------------
Total current assets.................................................................... 13,206,000
Due from affiliated company....................................................................... 3,125,800
Land, building and equipment:
Land......................................................................................... 20,255,500
Building..................................................................................... 191,746,200
Furniture, fixture and equipment............................................................. 21,141,000
Construction in progress..................................................................... 2,491,400
------------
235,634,100
Less accumulated depreciation................................................................ 3,341,700
------------
232,292,400
Operating equipment, net.......................................................................... 1,451,700
Deferred debt issuance costs and other assets, net of accumulated amortization of $634,070........ 734,400
Capitalized interest, net of accumulated amortization of $54,800.................................. 1,242,100
Goodwill, net of accumulated amortization of $140,100............................................. 6,974,500
------------
Total assets....................................................................... $259,026,900
------------
------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable....................................................................... $ 5,068,100
Advance deposits............................................................................. 5,346,800
Accrued interest............................................................................. 1,026,300
Other accrued liabilities.................................................................... 6,890,100
Due to affiliated companies.................................................................. 32,909,800
Note payable................................................................................. 90,000,000
Current portion of chattel mortgages and capital lease obligations........................... 167,600
------------
Total current liabilities............................................................... 141,408,700
Long-term debt.................................................................................... 25,000,000
Deferred income tax liability..................................................................... 4,266,900
Due to affiliated companies....................................................................... 16,869,400
Minority interest................................................................................. 48,786,300
Shareholder's equity:
Common stock, non par value:
Authorized shares - 3,000 issued and outstanding shares - 1,000............................... 11,494,000
Additional paid-in capital........................................................................ 10,800,000
Retained earnings................................................................................. 401,600
------------
Total shareholder's equity.............................................................. 22,695,600
------------
Total liabilities and shareholder's equity......................................... $259,026,900
------------
------------
</TABLE>
See accompanying notes.

F-43

WHG EL CON CORP.
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998

1. ORGANIZATION AND PRINCIPAL ACCOUNTING POLICIES

ORGANIZATION

WHG El Con Corp. (the Company), organized under the laws of the State of
Delaware, is a wholly owned subsidiary of Patriot American Hospitality Operating
Company Acquisition Subsidiary, a wholly owned subsidiary of Wyndham
International, Inc. (Wyndham). The Company owns 46.54% of WKA El Con Associates
(the Partnership), a joint venture organized under the General Partnership Law
of the State of New York, pursuant to a Joint Venture Agreement (the Agreement)
dated January 9, 1990, as amended, for the purpose of becoming a general and
limited partner of El Conquistador Partnership L.P. (El Con).

El Con is a limited partnership organized under the laws of Delaware
pursuant to a Joint Venture Agreement dated January 12, 1990, as amended (the
Agreement). El Con is 50% owned by WKA El Con Associates and 50% owned by
Conquistador Holding, Inc., a wholly-owned subsidiary of Patriot American
Hospitality (Patriot). By agreement between Wyndham and Patriot, the
Partnership's interest is the controlling 50% interest in El Con. El Con owns
and operates a luxury resort hotel and casino in Fajardo, Puerto Rico (the
Resort).

The consolidated balance sheet includes the accounts of the Company, the
Partnership and El Con. (see Note 13).

The Partnership is a 50% limited partner in Las Casitas Development Company
I, S en C (S.E.) (Las Casitas), a joint venture that constructed and sold
condominiums on property adjacent to El Con.

BASIS OF PRESENTATION

The consolidated balance sheet information at September 30, 1998 includes
all adjustments (consisting of normal accounting adjustments) that management
considers necessary for a fair presentation of the consolidated balance sheet at
September 30, 1998.

As part of the acquisition by Wyndham and Patriot, accounted for under the
purchase method, the Partnership's investment in El Con was increased by
approximately $22,408,000 and capitalized interest costs were decreased by
approximately $774,000.

INVENTORIES

Inventories, which consist mainly of food, beverages and supplies, are
valued at the lower of cost (first-in, first-out method) or market.

LAND, BUILDING AND EQUIPMENT

F-44

WHG EL CON CORP.
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

DEFERRED DEBT ISSUANCE COSTS AND OTHER ASSETS

Debt issuance costs include legal and underwriting fees, other fees
incurred in connection with the financing and other costs. These costs are being
amortized on a straight-line basis over the term of the debt. Certain other
capital and costs related to El Con were incurred by the Partnership and are
being amortized over 50 years.

GOODWILL

Goodwill represents the excess of the purchase price over the amount
assigned to net assets acquired and is being amortized over 20 years by the
straight-line method. At each balance sheet date the Company evaluates the
realizability of goodwill based on expectations of non-discounted cash flows
or whenever events or changes in circumstances indicate that it may not be
recoverable.

2. RESTRICTED CASH AND INVESTMENTS HELD BY BANK

3. TRADE ACCOUNTS RECEIVABLE

At September 30, 1998, trade accounts receivable consisted of the
following:

<TABLE>
<CAPTION>
<S> <C>
Trade accounts receivable -- hotel........................................................ $3,373,500
Less allowance for doubtful accounts...................................................... 172,500
----------
3,201,000
Trade accounts receivable -- casino....................................................... 87,400
Less allowance for doubtful accounts...................................................... 75,500
----------
11,900
----------
Trade accounts receivable, net....................................................... $3,212,900
----------
----------
</TABLE>

4. TRANSACTIONS WITH RELATED PARTIES

El Con has an Operating and Management Agreement (the Management Agreement)
with Williams Hospitality Group Inc. (Williams Hospitality). The Management
Agreement provides that Williams Hospitality will manage the Resort for a period
of 20 years for a basic management fee of 3.5% of the Resort's gross revenues,
as defined, and an incentive management fee of 10% of the Resort's operating
profit, as defined. Incentive management fees accrued each year are not payable
until significant cash flow levels are achieved. In addition, El Con is required
to pay certain administrative expenses incurred by Williams Hospitality in
connection with management of the Resort.

5. DUE TO AFFILIATED COMPANIES AND PARTNERS

F-45

WHG EL CON CORP.
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

Juan Associates. At September 30, 1998 amounts due to affiliated companies
consisted of the following:

<TABLE>
<CAPTION>
Current:
<S> <C>
Due to Williams Hospitality:
Basic management fees.................................................................... $ 301,900
Other.................................................................................... 169,300
Due to Posadas de Puerto Rico................................................................. 32,414,900
Due to Posadas de San Juan Associates......................................................... 23,700
-----------
$32,909,800
-----------
-----------
Non current:
Affiliate:
Due to Williams Hospitality:
Incentive management fees........................................................... $ 8,794,200
Interest at 10% on incentive management fees........................................ 1,112,800
Advances............................................................................ 1,500,000
Interest on advances................................................................ 958,300
Other............................................................................... 43,700
-----------
12,409,000
Due to Patriot........................................................................... 4,460,400
-----------
$16,869,400
-----------
-----------
</TABLE>

The Partnership guaranteed a revolving credit facility from GDB to El Con
in the aggregate amount of up to $6,000,000. The revolving credit facility was
terminated in May 1998.

6. CHATTEL MORTGAGES AND CAPITAL LEASE OBLIGATIONS

7. LONG-TERM NOTE PAYABLE

The note is payable in quarterly installments of $250,000 commencing in May
2000. Any unpaid principal and interest is payable in May 2002. The note bears
interest at a variable rate, computed quarterly, equal to LIBOR, plus 1.75%,
interest rate at September 30, 1998 was 7.50%. Under the terms of the Credit
Facility Agreement dated May 5, 1992, interest payments are deferred during the
first five years.

F-46

WHG EL CON CORP.
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

8. LONG-TERM DEBT

At September 30, 1998 long-term debt consisted of the following:

<TABLE>
<CAPTION>
<S> <C>
Government Development Bank for Puerto Rico...................................... $25,000,000
-----------
$25,000,000
-----------
-----------
</TABLE>

The Authority issued 1991 Series A, Industrial Revenue Bonds for
$90,000,000 and 1991 Series B, Industrial Revenue Bonds for $30,000,000.

Commencing on May 1, 1996, the Bonds were subject to redemption at El Con's
option at par plus accrued interest, if any. The Bonds are due on November 1,
1999 and interest is payable quarterly. The 1991 Series A Bonds and the 1991
Series B Bonds bear interest at a variable rate, computed quarterly, equal to
100% and 94%, respectively, of a LIBOR rate minus 1/8th of 1%. Effective
November 1, 1996, the interest rate on the 1991 Series A Bonds increased to 100%
of the LIBOR rate. On February 7, 1991, El Con entered into an Interest Rate
Swap Agreement that expired on March 8, 1998 by which El Con agreed to pay,
effective May 1, 1991, a fixed rate of 7.55% on the outstanding principal of
$120,000,000 in exchange for the counterparty's obligation to pay the variable
interest rate equal to 86% and 94% respectively, of the LIBOR rate minus 1/8th
of 1%.

The Loan Agreement provides that El Con will deposit with the trustee all
interest which will become due not later than the 124th day preceding the date
of payment. The Bonds are collaterilized by a letter of credit, that terminates
on September 9, 1998, issued by The Bank of Tokyo-Mitsubishi Ltd (formerly The
Mitsubishi Bank, Limited). The Loan Agreement required the letter of credit to
be renewed or replaced prior to June 9, 1998 or the debt amounting to
$120,000,000 would become due on August 3, 1998. On August 3, 1998, the letter
of credit was honored and the $120,000,000 was paid in full. In accordance with
the Letter of Credit and Reimbursement Agreement, El Con was obligated to
immediately reimburse the letter of credit issuer the full amount drawn under
the letter of credit. On August 3, 1998, El Con made a partial payment of
$30,000,000 and entered into an Assignment and Modification Agreement of the
Letter of Credit Agreement with Citicorp Real Estate, Inc. (CRE). CRE reimbursed
the letter of credit issuer with respect to the $90,000,000 balance due under
the Letter of Credit and Reimbursement Agreement. As part of the Assignment and
Modification Agreement, the remaining $90,000,000 advanced by CRE matured on
November 3, 1998, with an additional extension option up to March 15, 1999, if
certain conditions were met. Interest on the $90,000,000 is payable at a rate
equal to 7.91% per annum up to September 1, 1998 and at a rate equal to LIBOR
plus 225 basis points up to maturity (7.75% as of November 30, 1998). The
$30,000,000 used for the partial payment of the letter of credit was obtained
from a cash advance received from Posadas de Puerto Rico, an affiliate company
through common ownership.

F-47

WHG EL CON CORP.
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

Commencing on April 1, 1993, El Con was required to deposit annually with
an escrow agent 50% of the Available Cash Flow, as defined in the Loan Agreement
with GDB, up to a maximum of $1,666,700 plus any prior year requirement in
arrears. Through September 30, 1998 there had been no amounts deposited in
escrow under this provision.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board Statement No. 107 'Disclosures About
Fair Value of Financial Instruments' requires the disclosure of the fair value
of El Con's financial instruments at September 30, 1998. The carrying amount of
investments, notes payable to bank, chattel mortgage notes and capitalized
leases approximates fair value because of the short maturity of the instruments
or recent issuance. The fair value of El Con's long-term debt has not been
determined because similar terms and conditions may no longer be available.

10. INCOME TAXES

The Company's operations are included with Wyndham's Federal income tax
return. Statement of Financial Accounting Standards No. 109 'Accounting for
Income Taxes', (SFAS No. 109) requires that a portion of income tax expense be
allocated to the Company. The 'Separate Return Method' was utilized to calculate
the Federal income tax provision allocated to the Company.

The Partnership is not taxable for Puerto Rico income tax purposes pursuant
to an election submitted to the Puerto Rico Treasury Department. Instead, each
Partner reports their distributive share of the Partnership's profit and losses
in their respective income tax returns.

El Con was granted a tax exemption grant under the provisions of the Puerto
Rico Tourism Incentives Act of 1993 (the Tourism Act). The Tourism Act provides
for a ten-year grant which may be extended for an additional ten-year term.
Major benefits of this Act are: a 90% exemption from income taxes on hotel
income, and a 90% exemption from municipal real and personal property taxes
through the entire term of the grant. El Con's casino operations are not covered
by the tax exemption grant and are fully taxable.

Deferred income taxes reflect the net tax effects of temporary differences
between the amount of assets and liabilities for financial reporting purposes
and the amounts used for income taxes in the income tax return of the Company.

The deferred tax liability as of September 30, 1998 relates to the
depreciation method used for book and tax purposes.

F-48

WHG EL CON CORP.
NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1998

11. COMMITMENTS

<TABLE>
<CAPTION>
<S> <C>
1998............................................................................ $ 210,000
1999............................................................................ 210,000
2000............................................................................ 210,000
2001............................................................................ 210,000
2002............................................................................ 240,000
Thereafter...................................................................... 5,515,000
----------
$6,595,000
----------
----------
</TABLE>

12. EMPLOYEES' SAVINGS PLAN
Effective January 1, 1997, El Con adopted an employees' savings plan for
all hourly employees after one year of service or 1,000 hours. Employees covered
by any collective bargaining agreement are not eligible to participate in the
plan. Members of the plan can contribute an unlimited percentage of their after
tax compensation. El Con's contribution is $300 per employee per year and a
discretionary additional contribution.
Effective January 1, 1997, El Con adopted a salary savings plan for all
salaried employees after one year of service or 1,000 hours. Employees covered
by any collective bargaining agreement are not eligible to participate in the
plan. The plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) and Section 1165(e) of the Puerto Rico Income Tax
Act of 1994, as amended.
Under the provisions of the plan, El Con makes a minimum base contribution
of $300 per participant plus a discretionary contribution based on sick leave
accrued in excess of 240 hours and matches the employee's contribution based on
the percentage the gross operating profit, as defined, exceeds El Con's annual
operating budget as follows:

<TABLE>
<CAPTION>
MATCHING
CONTRIBUTION
G.O.P. EXCEEDS BUDGET BY PERCENTAGE
- -------------------------------------------------------------------------------- ------------
<S> <C>
Less than 5%.................................................................... 25%
5%.............................................................................. 35%
10%............................................................................. 45%
15%............................................................................. 55%
20%............................................................................. 65%
</TABLE>

13. IMPACT OF YEAR 2000

El Con has developed a plan to modify its information technology systems to
be ready for the year 2000 and has begun converting critical data processing
systems. El Con expects the project to be substantially completed by 1999. El
Con does not expect this project to have a significant effect on its financial
position.

14. HURRICANE GEORGES

15. SUBSEQUENT EVENTS

On November 3, 1998, El Con and Citicorp Real Estate, Inc. amended the
Assignment and Modification Agreement to provide for a maturity date of January
29, 1999.

F-49

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
WHG EL CON CORP.

We have audited the accompanying balance sheet of WHG El Con Corp. as of
December 31, 1997. This balance sheet is the responsibility of the Company's
management. Our responsibility is to express an opinion on this balance sheet
based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also 0includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of WHG El Con Corp. as of December 31,
1997 in conformity with generally accepted accounting principles.

The accompanying balance sheet has been prepared assuming that WHG El Con
Corp. will continue as a going-concern. As more fully described in Note 6, El
Conquistador Partnership L.P., a 23.27% indirectly owned partnership, did not
renew or replace prior to June 9, 1998 a letter of credit collaterizing
$120,000,000 of indebtedness and the debt was required to be repaid on August 3,
1998. The debt was partially repaid with proceeds from a short-term loan due on
January 29, 1999 and the proceeds of an advance from Posadas de Puerto Rico
Associates, Incorporated, an affiliate of the Company. This condition raises
substantial doubt about the Company's ability to continue as a going-concern.
The balance sheet does not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classifications of liabilities that may result from the outcome of this
uncertainty.

ERNST & YOUNG LLP

San Juan, Puerto Rico
October 2, 1998, except for the
fourth paragraph of Note 5 as to
which the date is November 3, 1998

F-50

PURCHASERS OF THE BONDS ARE NOT ACQUIRING ANY INTEREST IN,
OR SECURITIES OF, WHG EL CON CORP.

WHG EL CON CORP.
BALANCE SHEET
DECEMBER 31, 1997

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash.............................................................................................. $ 3,106,400
Interest receivable............................................................................... 15,200
Notes receivable from affiliated companies........................................................ 5,228,300
------------
Total assets....................................................................... $ 8,349,900
------------
------------

LIABILITIES AND DEFICIENCY IN ASSETS
Liabilities:
Deferred income taxes........................................................................ $ 1,978,000
Losses in excess of equity investment in WKA El Con Associates............................... 7,090,200
------------
Total liabilities.................................................................. $ 9,068,200
------------
------------
Deficiency in Assets:
Common stock, non par value:
Authorized shares -- 3,000, issued and outstanding shares -- 1,000...................... $ 12,056,100
Accumulated deficit..................................................................... (12,774,400)
------------
Total Deficiency in Assets......................................................... (718,300)
------------
Total liabilities and Deficiency in Assets......................................... $ 8,349,900
------------
------------
</TABLE>

See accompanying notes.

F-51

WHG EL CON CORP.
NOTES TO THE BALANCE SHEET
DECEMBER 31, 1997

1. ORGANIZATION AND PRINCIPAL ACCOUNTING POLICIES

ORGANIZATION

WHG El Con Corp. (the Company), organized under the laws of Delaware, is a
wholly-owned subsidiary of WHG Resorts & Casinos Inc. (WHG). The Company owns
46.54% of WKA El Con Associates (WKA), a joint venture organized under the
General Partnership Law of the State of New York for the purpose of becoming a
general and a limited partner of El Conquistador Partnership L.P. (El Con). El
Con owns the El Conquistador Resort & Country Club (the Resort), a luxury resort
hotel and casino in Fajardo, Puerto Rico.

CHANGE IN FISCAL YEAR

The Company changed its fiscal year from June 30 to December 31 beginning
with the period ended December 31, 1997.

BASIS OF PRESENTATION

INVESTMENT IN WKA

The investment in WKA is accounted for under the equity method. The general
partners of WKA will provide any additional financing requirements. Capitalized
interest is being amortized by the straight-line method over the estimated
useful life of the Resort property.

2. NOTES RECEIVABLE FROM AFFILIATED COMPANIES

Notes receivable from WKA and El Con at December 31, 1997 consisted of the
following:

<TABLE>
<S> <C>
Note receivable due through May, 2002 from El Con............................... $ 186,160
Subordinated notes receivable due in 2003 to 2005 from WKA...................... 3,830,094
Accrued interest receivable..................................................... 1,212,046
----------
$5,228,300
----------
----------
</TABLE>

Repayment of the notes, including accrued interest, is subordinated to
other long-term debt of El Con.

3. INVESTMENT IN WKA

The Company owns a 46.54% general partnership interest in WKA. Summarized
financial information for WKA as of December 31, 1997 is as follows:

<TABLE>
<S> <C>
Total assets................................................................... $21,171,900
Total liabilities.............................................................. 36,497,200
Deficiency in partners' capital................................................ 15,325,300
</TABLE>

4. INCOME TAXES

The Company's operations are included with WHG's Federal income tax return.
Statement of Financial Accounting Standards No. 109 'Accounting for Income
Taxes', (SFAS No. 109) requires that a portion of income tax expense be
allocated to the Company. The 'Separate Return Method' was utilized to calculate
the Federal income tax provision allocated to the Company.

The defered tax liability as of December 31, 1997 relates to the
depreciation method used for book and tax purposes.

F-52

WHG EL CON CORP.
NOTES TO THE BALANCE SHEET -- (CONTINUED)
DECEMBER 31, 1997

5. SUBSEQUENT EVENTS

BUSINESS ACQUISITION

On January 16, 1998, Patriot American Hospitality Operating Company
Acquisition Subsidiary, a wholly-owned subsidiary of Wyndham International, Inc.
(Wyndham), merged with and into WHG. As part of the transaction, WHG
stockholders received for each issued and outstanding share of common stock .784
shares of Wyndham and Patriot American Hospitality, Inc. (Patriot), a
self-administered REIT, which trade as 'Paired Shares' on the New York Stock
Exchange. The purchase transactions were accounted for under the purchase method
and the cumulative purchase price paid by Wyndham and Patriot was the basis used
to record net assets in the records of WHG and its subsidiaries.

EL CON REFINANCING

El Con is engaged in the process of refinancing the balance due to CRE
through a new bond issue by the Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority. Based on
operating history of El Con Resort, the Company's management believes such
refinancing will be achieved, but there can be no assurance thereof. If such
refinancing is not obtained, it raises substantial doubt about the El Con, WKA
and the Company's ability to continue as a going-concern.

On November 3, 1998, the Partnership and CRE amended the Assignment and
Modification Agreement to provide for a maturity date of January 29, 1999.

HURRICANE GEORGES

On September 21 and 22, 1998, Hurricane Georges caused certain damage to
the Resort. The financial effects of the physical damage caused by the hurricane
are estimated at $36,000,000, however, management of the Company believes that
the nature of the damage and its insurance coverage is such that there will not
be a significant impact on El Con's or the Company's financial condition.

6. IMPACT OF YEAR 2000 -- UNAUDITED

The Company has developed a plan to modify its information technology to be
ready for the year 2000 and has begun converting critical data processing
systems. The Company expects the project to be substantially completed by 1999.
The Company does not expect this project to have significant effect on its
financial position.

F-53

APPENDIX A

FORM OF OPINION OF FIDDLER GONZALEZ & RODRIGUEZ, LLP, BOND COUNSEL

[ ,] 1999

Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities
Financing Authority
San Juan, Puerto Rico

Gentlemen:

We have examined Act No. 121 of the Legislature of Puerto Rico, approved
June 27, 1977, as amended (the 'Act'), creating Puerto Rico Industrial, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority
(the 'Authority'), a body corporate and politic constituting a public
corporation and governmental instrumentality of Puerto Rico ('Puerto Rico').

We have also examined certified copies of the proceedings of the Board of
Directors of the Authority in authorizing the execution and delivery of the
Trust Agreement and the Loan Agreement hereinafter referred to, and certified
copies of the proceedings and other proofs submitted relative to the
authorization, issuance, and sale of the following bonds (the 'Bonds'):

$104,000,000
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
TOURISM REVENUE BONDS, 1999 SERIES A
(EL CONQUISTADOR RESORT PROJECT)

Said Bonds are issued under and pursuant to a Deed of Trust Agreement (the
'Trust Agreement'), dated the date hereof, by and between the Authority and
Banco Santander Puerto Rico, Trustee (the 'Trustee').

The proceeds of the sale of the Bonds are to be used for the purpose of
repaying the principal of and interest on an interim loan provided by Citicorp
Real Estate, Inc. to El Conquistador Partnership L.P. (the 'Borrower'), funding
certain reserves and paying certain costs and expenses of issuing the Bonds. The
proceeds of said interim financing were used to pay Borrower's obligations under
a certain reimbursement agreement resulting from the redemption of bonds issued
by the Authority for the financing, in part, of the purchase, renovation,
development, construction, equipping and operation of a hotel in Fajardo, Puerto
Rico, known as El Conquistador Resort & Country Club.

The Authority has entered into a Loan Agreement, dated the date hereof (the
'Loan Agreement'), with the Borrower providing for the loan of the proceeds of
the sale of the Bonds to the Borrower and for repayment by the Borrower of the
loan in amounts sufficient to pay the principal of and interest on the Bonds as
the same will become due and payable. The Loan Agreement provides that the loan
repayments will be paid directly to the Trustee and will be deposited to the
credit of a special fund created by the Trust Agreement and designated 'Tourism
Revenue Bonds 1999 Series A (El Conquistador Resort Project) Bonds Fund' (the
'Bond Fund'), which special fund is charged with the payment of the principal of
and interest on the Bonds. In addition, the Loan Agreement, except for certain
rights of the Authority, and the repayments thereunder, has been assigned to the
Trustee.

The Bonds are subject to redemption as provided in the Trust Agreement.

As to any questions of fact material to our opinion, we have relied upon
representations of the Authority and the Borrower contained in the Trust
Agreement and the Loan Agreement, the

A-1

certified proceedings and other certifications by officials of the Authority and
the Borrower, without undertaking to verify the same by independent
investigation.

We have also examined one of the Bonds as executed and authenticated.

All capitalized terms used in this opinion letter and not otherwise defined
herein will have the meanings ascribed to them in the Trust Agreement.

From such examination, we are of the opinion that:

1. The Act is valid.

2. The proceedings of the Board of Directors of the Authority required
in connection with the authorization, issuance and sale of the Bonds and
the authorization, execution, and delivery of the Loan Agreement and the
Related Documents to which the Authority is a party and the Trust Agreement
have been validly and legally taken.

3. The Trust Agreement and the Related Documents to which the
Authority is a party have been duly authorized, executed and delivered by
the Authority and assuming due authorization, execution and delivery by the
other parties thereto, constitute the legal, valid, binding and enforceable
obligations of the Authority in accordance with their terms, except to the
extent such enforceability may be limited by bankruptcy, insolvency or
other laws affecting creditors' rights generally, and subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

4. The Bonds have been duly authorized by the Authority and constitute
legal, valid, and binding obligations of the Authority, payable solely from
the Bond Fund and entitled to the benefit of the Trust Agreement.

5. All right, title and interest of the Authority in and to the
Related Documents (except certain rights of the Authority including its
rights to payment of expenses indemnity) have been validly assigned to the
Trustee.

6. The Bonds do not constitute an indebtedness of either Puerto Rico
or any of its principal subdivisions, other than the Authority, and neither
Puerto Rico nor any of such political subdivisions, other than the
Authority, will be liable thereon.

7. The Bonds and the transfer of the Bonds, including gain derived
upon the sale of the Bonds, are exempt from Puerto Rico income tax pursuant
to Article 8(b) of the Act.

8. Interest on the Bonds is (i) excluded from the gross income of the
recipient thereof for Puerto Rico income tax purposes pursuant to Section
1022(b)(4)(B) of the Puerto Rico Internal Revenue Code of 1994, as amended
(the 'PR-Code'); (ii) exempt from Puerto Rico income tax and alternative
minimum tax pursuant to Section 1022(b)(4)(B) of the PR-Code, Article 8(b)
of the Act and Section 3 of the Puerto Rico Federal Relations Act ('PRFRA')
and; (iii) exempt from Puerto Rico municipal license tax pursuant to
Section 9(25) of the Puerto Rico Municipal License Tax Act of 1974, as
amended, and Section 3 of the PRFRA.

9. The Bonds are exempt from Puerto Rico personal property tax
pursuant to Section 3.11 of the Puerto Rico Municipal Property Tax Act of
1991, as amended, and Section 3 of the PRFRA.

10. The Bonds are exempt from Puerto Rico (i) gift tax with respect to
donors who are residents of Puerto Rico at the time the gift is made and
(ii) estate tax with respect to estates of decedents who are residents of
Puerto Rico at the time of death, excluding, in each case, United States
citizens who acquired their United States citizenship other than by reason
of birth or residence in Puerto Rico.

11. Assuming that the Partnership complies with the source of income
representations, warranties and covenants contained in the Loan Agreement,
then:

a. Interest received or accrued on the Bonds is excludable from
gross income pursuant to Section 933(1) of the Code if the holder of the
Bonds is an individual who is a bona fide resident of Puerto Rico during
the entire taxable year in which the interest is received or accrued.

A-2

b. Interest received or accrued on the Bonds is not subject to
United States federal income tax if the holder of the Bonds is a
corporation organized under the laws of Puerto Rico or any foreign
country and such interest is not effectively connected with the conduct
of a trade or business in the United States by such corporation.

12. Interest on the Bonds is not excluded from the gross income of the
recipient thereof for United States federal income tax purposes under
Section 103(a) of the Code.

United States taxpayers, other than individuals who are bona fide
residents of Puerto Rico during the entire taxable year, will be subject to
United States federal income tax on gain realized upon the sale or exchange
of the Bonds. Pursuant to Notice 89-40, 1989-1 CB 681, gain on the sale of
the Bonds (not including original issue discount accruing under the Code as
of the date of such sale or exchange) by an individual who is bona fide
resident of Puerto Rico for purposes of Section 865(g)(1) of the Code will
constitute income from sources within Puerto Rico and will qualify for the
exclusion provided in Section 933(1) of the Code, provided that the Bonds
do not constitute inventory property in such individual's hands.

Ownership of the Bonds may result in having a portion of the interest
expense allocable to interest on the Bonds disallowed for purposes of
computing the regular tax and the alternative minimum tax for Puerto Rico
income tax purposes.

This opinion is limited to the above, and we express no other opinion
regarding Puerto Rico or United States tax consequences arising from ownership
or disposition of the Bonds.

This letter is furnished by us solely for the benefit of the Authority and
the holders from time to time of the Bonds and may not be relied upon by any
other person.

Respectfully submitted,

A-3

_____________________________ _____________________________

NONE OF EL CONQUISTADOR, AFICA OR THE UNDERWRITERS HAVE AUTHORIZED ANY
PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS IN THIS OFFICIAL STATEMENT
AND PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT IS IN
THIS OFFICIAL STATEMENT AND PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS OFFICIAL
STATEMENT AND PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO
BUY THE BONDS IN ANY JURISDICTION THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION IN THIS OFFICIAL STATEMENT AND PROSPECTUS IS COMPLETE AND ACCURATE
AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER THAT DATE.

------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Glossary................................................................................................... 1
Disclosure Regarding Forward-Looking Statements............................................................ 1
Summary.................................................................................................... 2
Risk Factors............................................................................................... 11
Use of Proceeds............................................................................................ 20
The Resort................................................................................................. 21
El Conquistador Partnership L.P. .......................................................................... 29
Security Ownership of Management and Certain Beneficial Owners............................................. 31
Management of El Conquistador Partnership L.P. ............................................................ 34
Selected Financial Data.................................................................................... 38
Management's Discussion and Analysis
of Financial Condition and Results
of Operations............................................................................................ 40
Legal Proceedings.......................................................................................... 49
Policy with Respect to Certain Activities.................................................................. 50
Investment Objectives and Policies......................................................................... 51
Policies with Respect to Certain Transactions.............................................................. 51
Certain Relationships and Related Transactions............................................................. 51
The Bonds.................................................................................................. 53
Summary of the Loan Agreement.............................................................................. 60
Summary of the Trust Agreement............................................................................. 65
AFICA...................................................................................................... 70
Government Development Bank for
Puerto Rico.............................................................................................. 71
Tax Consequences........................................................................................... 72
Rating..................................................................................................... 73
Legal Investment........................................................................................... 73
Underwriting............................................................................................... 73
Legal Matters.............................................................................................. 74
Continuing Disclosure Covenant............................................................................. 74
Reports of El Conquistador
Partnership L.P. ........................................................................................ 76
Experts.................................................................................................... 76
Miscellaneous.............................................................................................. 77
Index to Financial Statements.............................................................................. F-1
Form of Opinion of Bond Counsel............................................................................ A-1
</TABLE>

------------------------

UNTIL ALL DEALERS EFFECTING TRANSACTIONS IN THE BONDS,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

_____________________________ _____________________________

$104,000,000

AFICA
TOURISM REVENUE BONDS,
1999 SERIES A
(EL CONQUISTADOR
RESORT PROJECT)

--------------------------------------
OFFICIAL STATEMENT
AND PROSPECTUS
--------------------------------------

CITICORP FINANCIAL
SERVICES CORPORATION

_____________________________ _____________________________

PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting commissions. All of the amounts shown are estimates except for the
Securities and Exchange Commission registration fee.

<TABLE>
<CAPTION>
ITEM AMOUNT
- ---------------------------------------------------------------------------------- --------

<S> <C>
SEC registration fee.............................................................. $ 30,612
Printing expenses.................................................................
Accounting fees and expenses......................................................
Legal fees and expenses...........................................................
Trustee fees...................................................................... 30,000
AFICA fees........................................................................ 520,000
Miscellaneous expenses............................................................
--------
TOTAL........................................................................ $
--------
--------
</TABLE>

ITEM 32. SALES TO SPECIAL PARTIES.

Not applicable.

ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.

Not applicable.

ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Partnership Agreement of the El Conquistador Partnership L.P. provides
that no general partner and none of its officers, directors, partners, employees
or agents, whether acting as a general partner, a member of the Development
Committee (as defined in the Partnership Agreement) or otherwise, has any
liability to El Conquistador or any other partner for any acts performed by such
general partner, officer, director, partner, employee or agent, by or on behalf
of El Conquistador in its capacity as such except for gross negligence or
willful misconduct. The Partnership Agreement of El Conquistador also provides
that the liability of each limited partner is limited to its capital
contribution and that no limited partner as such has any other liability to
contribute money to, or in respect of the liabilities or obligations of, El
Conquistador, nor is any limited partner as such personally liable for any
obligations of El Conquistador except as otherwise provided by law.

Each of the general partner and limited partners of El Conquistador will be
a Delaware corporation at the time of the offering.

Each partner's authority to indemnify its respective officers and directors
will be governed by the provisions of Section 145 of the General Corporation Law
of the State of Delaware and by the Certificate of Incorporation of such
partner. The Certificate of Incorporation of each partner will provide that it
shall, to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, (1) indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and (2)
advance expenses to any and all said persons, and that such indemnification and
advances shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such offices, and
shall continue as to persons who have ceased to be directors, officers,
employees or agents and shall inure to the benefit of the heirs, executors and

II-1

administrators of such person. In addition, the Certificate of Incorporation of
each partner will provides for the elimination of personal liability of
directors of such partner to such partner or its stockholders for monetary
damages for breach of fiduciary duty as a director, to the fullest extent
permitted by the Delaware General Corporation Law, as amended and supplemented.

ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.

Not applicable.

ITEM 36. FINANCIAL STATEMENT AND EXHIBITS.

(a) Financial Statements.

<TABLE>
<CAPTION>
EL CONQUISTADOR PARTNERSHIP L.P.
<S> <C>
Pro Forma Condensed Financial Statements (Unaudited)
Introduction.......................................................................................... F-2
Pro Forma Condensed Balance Sheet as of September 30, 1998............................................ F-3
Pro Forma Condensed Statement of Operations for Nine Months Ended September 30, 1998.................. F-5
Pro Forma Condensed Statements of Operations for Nine Months Ended December 31, 1997.................. F-7
Audited Financial Statements
Report of Independent Auditors........................................................................ F-9
Balance Sheet as of September 30, 1998 and 1997 and at December 31, 1997 and 1996 and March 31,
1997................................................................................................. F-10
Statements of Operations and (Deficiency in) Partners' Capital for Nine Months Ended September 30,
1998 and 1997, for the Period of January 1, 1998 to February 28, 1998, for the Period of March 1,
1998 to September 30, 1998, for the Nine Months Ended December 31, 1996 and for Fiscal Years Ended
December 31, 1997 (9 Months), March 31, 1997 and 1996................................................ F-11
Statements of Cash Flows for Nine Months Ended September 30, 1998 and 1997, for the Period of January
1, 1998 to February 28, 1998, for the Period of March 1, 1998 to September 30, 1998, for the Nine
Months Ended December 31, 1996 and for Fiscal Years Ended December 31, 1997 (9 Months), March 31,
1997 and 1996........................................................................................ F-12
Notes to Financial Statements......................................................................... F-13

II-2

<TABLE>
<CAPTION>
WHG EL CON CORP.
<S> <C>
Consolidated Balance Sheet (Unaudited)
Consolidated Balance Sheet as of September 30, 1998................................................... F-43
Notes to Consolidated Balance Sheet................................................................... F-44
Audited Balance Sheet
Report of Independent Auditors........................................................................ F-50
Balance Sheet as of December 31, 1997................................................................. F-51
Notes to Balance Sheet................................................................................ F-52
</TABLE>

(b) Exhibits.

<TABLE>
<C> <S>
*1 --Form of Contract of Purchase among El Conquistador Partnership L.P., Citicorp Financial Services
Corporation, PaineWebber Incorporated of Puerto Rico, Salomon Smith Barney Inc. and Puerto Rico
Industrial, Tourist, Educational, Medical and Environmental Control Facilities Authority ('AFICA').
'D'3.1 --El Conquistador Partnership L.P. Venture Agreement dated January 12, 1990 between WKA El Con Associates
and Kumagai Caribbean, Inc., as amended May 4, 1992, March 31, 1998 and April 29, 1998.
'D'3.2 --Certificate of Limited Partnership, as amended, of El Conquistador Partnership L.P.
*3.3 --Form of Amended and Restated Partnership Agreement of El Conquistador Partnership L.P.
*3.4 --Form of Amendment to Certificate of Limited Partnership of El Conquistador Partnership L.P.
*4.1 --Form of Loan Agreement between AFICA and El Conquistador Partnership L.P.
*4.2 --Form of Trust Agreement between AFICA and Banco Santander Puerto Rico, as trustee.
*4.3 --Form of Serial Bond (included in Exhibit 4.2 hereof).
*4.4 --Form of Term Bond (included in Exhibit 4.2 hereof).
*5 --Opinion of McConnell Valdez with respect to the legality of the securities being registered.
8 --Opinion of Fiddler Gonzalez & Rodriguez, LLP, with respect to certain tax matters included as Appendix
A to the official statement and prospectus.
'D'10.1 --El Conquistador Partnership L.P. Development Services and Management Agreement dated January 12, 1990
between El Conquistador Partnership L.P. and Williams Hospitality Management Corporation (now known as
Williams Hospitality Group Inc.), as amended as of September 30, 1990 and January 31, 1991.
'D'10.2 --Deed of Lease dated December 15, 1990 by Alberto Bachman Umpierre and Lilliam Bachman Umpierre to El
Conquistador Partnership L.P.
'D'10.3 --Letter of Credit and Reimbursement Agreement dated as of February 7, 1991 between El Conquistador
Partnership L.P. and The Mitsubishi Bank, Limited acting through its New York Branch (now known as The
Bank of Tokyo-Mitsubishi, Ltd.) and the Irrevocable Transferable Standby Letter of Credit dated
February 7, 1991 issued pursuant thereto.
'D'10.4 --First Amendment to the Letter of Credit and Reimbursement Agreement dated as of May 5, 1992 between El
Conquistador Partnership L.P., WKA El Con Associates, Kumagai Caribbean, Inc. and The Mitsubishi Bank,
Limited acting through its New York Branch (now known as The Bank of Tokyo-Mitsubishi, Ltd).
'D'10.5 --Assignment and Modification Agreement dated as of August 3, 1998 among El Conquistador Partnership
L.P., Citicorp Real Estate, Inc., Banco Popular de Puerto Rico, as trustee, AFICA and The Mitsubishi
Bank, Limited acting through its New York Branch (now known as The Bank of Tokyo-Mitsubishi, Ltd).
'D'10.6 --Replacement Reserve Agreement dated as of August 3, 1998 between El Conquistador Partnership L.P. and
Citicorp Real Estate, Inc.
'D'10.7 --Debt Service Reserve Agreement (Citicorp Real Estate, Inc.) dated as of August 3, 1998 between El
Conquistador Partnership L.P. and Citicorp Real Estate, Inc.
</TABLE>

II-3

<TABLE>
<C> <S>
'D'10.8 --Debt Service Reserve Agreement (Government Development Bank) dated as of August 3, 1998 between El
Conquistador Partnership L.P. and Citicorp Real Estate, Inc.
'D'10.9 --Environmental Indemnity Agreement dated as of August 3, 1998 by El Conquistador Partnership L.P. and
Patriot American Hospitality, Inc. in favor of Citicorp Real Estate, Inc.
'D'10.10 --Security Agreement dated as of August 3, 1998 between El Conquistador Partnership L.P. and Citicorp
Real Estate, Inc.
'D'10.11 --Assignment of Leases and Rents dated as of August 3, 1998 by El Conquistador Partnership L.P. to
Citicorp Real Estate, Inc.
'D'10.12 --Assignment of Licenses, Permits and Contracts dated as of August 3, 1998 by El Conquistador Partnership
L.P. to Citicorp Real Estate, Inc.
'D'10.13 --Assignment of Management Agreement and Subordination of Management Fees dated as of August 3, 1998 by
El Conquistador Partnership L.P. to Citicorp Real Estate, Inc. and acknowledged and consented to by
Williams Hospitality Group Inc.
'D'10.14 --Promissory Note dated August 3, 1998 in the aggregate principal amount of $32,021,172 made by El
Conquistador Partnership L.P. in favor of Posadas de Puerto Rico Associates, Incorporated.
'D'10.15 --Loan Agreement dated February 7, 1991 between The Government Development Bank for Puerto Rico and El
Conquistador Partnership L.P.
'D'10.16 --First Amendment to Loan Agreement dated May 5, 1992 between The Government Development Bank for Puerto
Rico and El Conquistador Partnership L.P.
'D'10.17 --Second Amendment to Loan Agreement dated as of October 4, 1996 between The Government Development Bank
for Puerto Rico and El Conquistador Partnership L.P.
'D'10.18 --Management Agreement Subordination and Attornment Agreement dated as of February 7, 1991 between
Williams Hospitality Management Corporation (now known as Williams Hospitality Group Inc.) and The
Mitsubishi Bank, Limited acting through its New York Branch (now known as The Bank of Tokyo-Mitsubishi,
Ltd).
'D'10.19 --Collateral Pledge Agreement dated as of February 7, 1991 among El Conquistador Partnership L.P., AFICA
and The Mitsubishi Bank, Limited acting through its New York Branch (now known as The Bank of
Tokyo-Mitsubishi, Ltd).
'D'10.20 --Mortgage dated February 7, 1991 by El Conquistador Partnership L.P. in favor of AFICA.
'D'10.21 --Deed of Mortgage dated February 7, 1991 by El Conquistador Partnership L.P. in favor of The Government
Development Bank for Puerto Rico.
'D'10.22 --Leasehold Mortgage dated February 7, 1991 by El Conquistador Partnership L.P. in favor of AFICA.
'D'10.23 --Deed of Leasehold Mortgage dated February 7, 1991 by El Conquistador Partnership L.P. in favor of The
Government Development Bank for Puerto Rico.
10.24 --Deed of Segregation and Ratification of Lease dated May 28, 1991 between Alberto Bachman Umpierre and
Lilliam Bachman Umpierre, and El Conquistador Partnership L.P.
10.25 --Amendment to Reimbursement Agreement and Ratification of Guaranties dated as of November 3, 1998 among
El Conquistador Partnership L.P., Patriot American Hospitality, Inc. and Citicorp Real Estate, Inc.
*10.26 --Form of Continuing Disclosure Agreement between El Conquistador Partnership L.P. and Banco Santander
Puerto Rico, as trustee.
*10.27 --Form of Master Security Agreement between El Conquistador Partnership L.P. and AFICA.
*10.28 --Form of Assignment of Leases and Rents and Security Agreement between El Conquistador Partnership L.P.
and AFICA.
*10.29 --Form of Assignment of Hotel Management Agreement between El Conquistador Partnership L.P. and AFICA.
*10.30 --Form of Mortgage between El Conquistador Partnership L.P. and AFICA.
*10.31 --Form of Leasehold Mortgage between El Conquistador Partnership L.P. and AFICA.
</TABLE>

II-4

<TABLE>
<C> <S>
*10.32 --Form of Mortgage Notes Pledge and Security Agreement between El Conquistador Partnership L.P. and
AFICA.
*10.33 --Form of Amended and Restated Management Agreement between El Conquistador Partnership L.P. and Williams
Hospitality Group Inc.
12 --Statement with respect to computation of ratios.
23.1 --Consent of Ernst & Young LLP with respect to El Conquistador Partnership L.P., WKA El Con Associates
and WHG El Con Corp.
23.2 --Consent of Ernst & Young LLP with respect to Conquistador Holding, Inc.
*23.3 --Consent of McConnell Valdez (contained in their opinion filed as Exhibit 5 hereto).
23.4 --Consent of Fiddler Gonzalez & Rodriguez, LLP.
23.5 --Consent of Shack & Siegel, P.C.
'D'24 --Powers of Attorney.
'D'25 --Statement of Eligibility of Trustee (separately bound).
27 --Financial Data Schedule (filed with EDGAR version only).
</TABLE>

- ------------

'D' Previously filed.

* To be filed by amendment.

ITEM 37. UNDERTAKINGS.

(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(i) The undersigned registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(l) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Amendment No. 1 to
the Registration Statement (333-65889) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, Texas on the 29th
day of December, 1998.

EL CONQUISTADOR PARTNERSHIP L.P.
(Registrant)

By: CONQUISTADOR HOLDING, INC.

By: /s/ JAMES D. CARREKER
...................................
NAME: JAMES D. CARREKER
TITLE: CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

Pursuant to the Securities Act of 1933, this Amendment No. 1 to the
Registration Statement (333-65889) has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITIES IN WHICH SIGNED DATE
- ------------------------------------------ -------------------------------------------- -------------------

<C> <S> <C>
/s/ JAMES D. CARREKER Chief Executive Officer (Principal Executive December 29, 1998
......................................... Officer) of the Registrant and Director of
JAMES D. CARREKER Conquistador Holding, Inc.

/s/ LAWRENCE S. JONES Executive Vice President and Treasurer December 29, 1998
......................................... (Principal Financial Officer and Principal
LAWRENCE S. JONES Accounting Officer) of the Registrant and
Director of Conquistador Holding, Inc.
</TABLE>

II-6

STATEMENT OF DIFFERENCES
------------------------

The registered trademark symbol shall be expressed as.................. 'r'
The dagger symbol shall be expressed as................................ 'D'

<PAGE>

NUMBER EIGHTEEN (18)

DEED OF SEGREGATION OF LAND AND
RATIFICATION OF LEASE

In the City of San Juan, Commonwealth of Puerto Rico, this twentieth
(28th) day May, nineteen hundred and ninety one (1991).

BEFORE ME

SILVESTRE M. MIRANDA, Attorney-at-Law and Notary Public in and for the
Commonwealth of Puerto Rico, with residence and offices in San Juan,
Puerto Rico.

APPEAR

AS PARTY OF THE FIRST PART: ALBERTO BACHMAN UMPIERRE, Social

Security Number 582-166-174, of legal age, married to Margarita Gonzalez Rivera,
property owner and resident of San Juan, Puerto Rico and LILLIAM BACHMAN
UMPIERRE, Social Security Number ###-##-####, of legal age, married to Jose
Fuertes Garzot, property owner and resident of San Juan, Puerto Rico,
hereinafter, collectively, the "Owners".

AS PARTY OF THE SECOND PART: EL CONQUISTADOR PARTNERSHIP, L.P.,
taxpayer identification number 06-1288145, a partnership organized and existing
under the laws of the State of Delaware, United States of America, hereinafter
"the Tenant", represented herein by its General Partners WKA EL CON ASSOCIATES,
taxpayer identification number 06-1288143, a partnership organized and existing
under the laws of the State of New York, United States of America, herein
represented by its authorized representative, MANUEL PEREDO LARA, Social
Security Number ###-##-#### of legal age, married, business executive and
resident of San Juan, Puerto Rico, whose authority for the execution of this
deed he will evidence whenever required; and

KUMAGAI CARIBBEAN, INC., taxpayer identification number 75-2303665, a
corporation organized and existing under the laws of the State of Texas, United
States of America, represented herein by its President, SHUNSUKE NAKANE Social
Security Number ###-##-#### of legal age, married and resident of San Juan,
Puerto Rico, whose authority for the execution of this deed he will evidence
whenever required. I, the Notary, hereby certify that I personally know the
persons appearing herein and I further attest through their statements as to
their age, civil status, professions and residence. They assure me that they
have and in my judgment they do have the necessary legal capacity to execute
this instrument, and therefore they freely and voluntarily

STATE

FIRST: That the Owners are the owners in fee simple of the real
property which is described in the Registry of the Property in the Spanish
language as follows (hereinafter the "Property").

"RUSTICA: Predio compuesto de 100 cuerdas, equivalentes a treinta y
nueve (39) hectaras, treinta (30) areas y cuatro (4) centiareas, terreno
quebrado y llano, destinado a pastos, situado en el islote denominado Palomino,
en el Mar Caribe y frente al Puerto de Fajardo, al Este del mismo; colinda por
sus cuatro puntos cardinales con el mencionado Mar Caribe. Enclava una casa y un
ranchon para peones y distintas cercas."

SECOND: The Owners acquired title to the Property by inheritance from
their parents Mister Alberto Bachman and Mistress Angelica Umpierre, pursuant to
Deeds of Will numbers One Hundred Fifty Seven (157) and One Hundred Fifty Eight
(158), executed before Notary Public Jorge M. Morales on November five (5),
nineteen hundred and fifty two (1952). The Property is recorded at page thirty
five, overleaf (35vto) of volume three hundred twenty six (326) of Fajardo
Property Number five hundred fifty (550).

THIRD: The Property is free and clear of liens and encumbrances except
for a lease constituted pursuant to Deed of Lease Number Twelve (12) of December
Fifteen (15) Nineteen Hundred Ninety (1990) before Notary Public Silvestre M.
Miranda (the "Deed of Lease") which is currently pending recording an Entry Five
Hundred Eighty (580), of Volume Thirty Nine (39) of the Book of Daily Entries of
the Registry of the Property, Fajardo Section and pursuant to which, the Owners
constituted in favor of the Tenant a thirty two (32) year lease subject to two
additional extensions of five (5) years each.

FOURTH: That in accordance with the provisions of the Deed of Lease,
the Owners agreed with the Tenant to segregate from the Property a parcel of
land with an area of Nine cuerdas with nine thousand nine hundred eighty one ten
thousandths of another cuerda (9.9981), which would constitute what was defined
in the Deed of Lease as the Reserved Area. It was further agreed by the parties
to the Deed of Lease, that once the Reserved Area was segregated from the
Property, such Reserved Area would be excluded from the Demised Premises (as
defined in the Deed of Lease), and the area of the parcel comprising the Demised
Premises, would thereafter coincide with the area of the remnant of the Property
after such segregation.

FIFTH: In accordance with their agreement, the Owners now segregate
from the Property the area defined in the Deed of Lease as the Reserved Area,
with the following description:

"RUSTICA: Predio de terreno de forma irregular situados en la islote
Palomino, en el Mar Caribe y frente al Puerto Fajardo, al Este del mismo,
Municipio de Fajardo con una cabida superficial de nueve cuerdas con nueve mil
novecientos ochenta y un diez milesimas otra (9.9981) equivalentes a treinta y
nueve mil doscientos noventa y seis metros cuadrados con veintinueve

centesimas de otro (39,296.29), lindes, por el Norte, en varias alineacinoes,
con Mar Caribe y con la finca de la cual se segrega; por el Sur, en varias
alineaciones, con el Mar Caribe con la finca de la cual se segrega; por el Este,
distintas alineaciones con el Mar Caribe y la finca de donde se segrega, y por
el Oeste, en varia alineaciones, con la finca de la cual se segrega el Mar
Caribe."

The aforestated segregation was authorized by the Planning Board of
Puerto Rico pursuant to a Resolution issued on January twenty five (25),
nineteen hundred ninety one (1991) in the case number ninety dash twenty four
dash sixteen forty three (90-24-1643), certified copy of which resolution is
attached and forms part of the first certified copy of this Deed. A copy of the
segregation plan of the aforesdescribed Reserved Area prepared and certified by
Alex Hornedo Robles license number eleven thousand seven hundred forty seven is
attached to the first certified copy of this Deed.

SIXTH: The remnant of the Property, identified in the Deed of the
Lease as the Demised Premises (after the segregation of the Reserved Area) is
described as follows:

"RUSTICA: Predio compuesto de noventa cuerda con diecinueve diez
milesimas de otra (90.0019) equivalentes a treinta y cinco (35) hectareas
treinta y siete (37) areas, cuarenta y dos (42) centiareas, cincuenta y seis
(56) miliareas, de forma irregular, terreno quebrado y llano, destinado ___
pastos y otros usos, situado en el islote denominado Palomino, en el Mar Caribe
y frente al Puerto de Fajardo, al este del mismo, en el Municipio de Fajardo;
colinda por sus cuatro puntos cardinales esta finca con el Mar Caribe y con
parcela segregada propiedad de Alberto Bachman Umpierre y Lilliam Bachman
Umpierre. Enclava una casa de hormigon, un ranchon para peones y otras
estructuras y cercas."

SEVENTH: For recording purposes only, the Owners value the Reserved
area in the sum of TWENTY THOUSAND DOLLARS ($20,000.00). The Owners request the
Registrar of the Property to take notice in the Registry Books under his
custody, of the aforedescribed segregation

and description of the Remnant of the Property, so that hereinafter the
segregated parcel forms a separate and independent property in the Registry
records.

EIGHTH: That having segregated the Reserved Area from the Property, the
parties now ratify the agreement contained in the Deed of Lease to the effect
that such Reserved Area shall no longer form part of the Demised Premises and
that the area of the Demised Premises shall hereinafter be deemed reduced to the
area of the remnant of the Property after the segregation of the Reserved Area
as indicated in the Deed of Lease and as described on Paragraph Sixth of this
Deed.

NINTH: The parties hereto confirm and ratify that the Deed of Lease is
now and shall remain, as amended herein, in full force and effect in accordance
with and subject to all of the terms and conditions stated therein.

ACCEPTANCE

I, the Notary, do hereby certify that I advised the appearing parties
of the legal effect of the present deed, who waived their right to have
attesting witnesses in this instrument, after having duly advised them of such
right.

I, the Notary, also certify and attest that this document was read by
the parties and having found it in accordance with their wishes and instructions
they approve and ratify the contents thereof and sign before me also placing
their initials on each and every page of the original of this deed.

I, further certify and attest that the appearing parties and I know and
fully understand the English language and I attest as to my personal
acquaintance to the appearing parties and to their personal qualifications.

TO ALL OF WHICH, under my signature, scroll and seal, signing and
sealing the same according to law I, the undersigned Notary, ATTEST.

SIGNED: ALBERTO BACHMAN UMPIERRE, LILLIAM BACHMAN UMPIERRE,
MANUEL PEREDO LARA, SHUNSUKE NAKANE.

SIGNED, SEALED, MARKED AND FLOURISHED: SILVESTRE M. MIRANDA -
NOTARY PUBLIC

THIS DEED HAS SIX (6) PAGES

I, the Notary, CERTIFY, that the foregoing is a true and correct copy
of the original which forms part of my protocol of public instruments for the
current year.

IN TESTIMONY WHEREOF, and at the request of part of interest I issue
the present FIRST certified copy which I sign, seal, mark and flourish in San
Juan, Puerto Rico, on the same date of its execution.

NOTARY PUBLIC

ESTADO LIBRE, ASOCIADO DE PUERTO RICO

Oficina del Gobernador

JUNTA DE PLANIFICACION

Santurce, Puerto Rico

Primera Extension a la
Consulta Numero 90-24-1643-JGU

RESOLUCION

Esta Junta de Planificacion de Puerto Rico, en sus reuniones del 9 y 17
de enero de 1991, aprobo y concedio variaciones segun solicitado en la Consulta
Numero 90-24-1643-JGU sobre la ubicacion de un proyecto turistico en una finca
con cabida de 292.7830 cuerdas que radica en la Carretera Estatal Numero 987 en
el Barrio Las Cabezas de Fajardo (Antiguo Hotel El Conquistador). Dichos
terrenos estan comprendidos dentro de un Distrito R-1, segun el Mapa de
Zonificacion de Fajardo vigente. Los mismos son propiedad de la Administracion
de Terrenos.

En la Conclusion de Derecho Numero 4 se indico que la parte proponente
mediante carta del 16 de enero de 1991, solicito una variacion a la Seccion
11.06 del Reglamento de Zonificacion Especial para las Zonas No Urbanas de los
Municipios Circundantes al Bosque Nacional del Caribe (El Yunque), para que se
permita la segregacion de un predio de terreno con cabida de 9.9981 cuerdas en
la Isla Palominos; no obstante no se incluyo en el acuerdo que se autorizo la
concesion de esta variacion.

Ahora la parte proponente, por conducto de la firma Ray, Melendez &
Asociados, mediante comunicacion fechada el 18 de enero de 1991 solicit se
aclare que se autorizo una segregacion con proposito de arrendamiento en la Isla
de Palominos.

La solicitud fue considerada por esta Junta de Planificacion, quien
despues del debido analisis de los argumentos de la parte proponente, considero
razonable la peticion formulada.

Tomando en consideracion lo anteriormente expuesto, en virtud de las
disposiciones de la Ley Numero 75 del 24 de junio de 1975, segun enmendada, y
del Reglamento Sobre Mejoras Publicas (Reglamento de Planificacion Numero 2),
esta Junta de Planificacion de Puerto Rico, mediante la presente Extension,
ACLARA PARTICULARES a los efectos de indicar que se autorizo

la concesion de una variacion para permitir la segregacion de un predio de
9.9981 cuerdas en la Isla de Palominos en la Consulta Numero 90-24-1643-JGU para
la ubicacion de un proyecto turistico en el Barrio Cabezas de Fajardo.

DISPONIENDOSE que: (1) todas las otras partes del informe anterior, no
alteradas por la presente Extension, quedan en todo su vigor y efecto.

DISPONIENDOSE, ademas, que cualquier parte afectada por esta decision
podra formular y radicar una solicitud de reconsideracion en la Seretaria de
esta Junta dentro de los primeros veinte (20) dias contados a partir del archivo
en autos de la notificacion de esta resolucion. El solicitante debera enviar
copia de tal escrito por correo certificado y acuse de recibo a todas las partes
que hayan intervenido en los procedimientos. Estos ultimos tendran diez (10)
dias naturales contados a partir de la notificacion para expresarse sobre la
solicitud de reconisderacion. Si no lo hicieren dentro del termino establecido,
se entendera que renuncian a su derecho de replica.

La Junta dentro de los quince (15) dias de haberse presentado dicha
mocion debera considerarla. Si la rechazare de plano o no actuare dentro de los
quince (15) dias, el termino para solicitar revision comenzara a correr
nuevamente desde que se notifique dicha denegatoria o desde que expiren esos
quince (15) dias, segun sea el caso. Si se tomare alguna determinacion en su
consideracion, el termino para solicitar revision empezara a contarse desde la
fecha en que se archiva en autos una copia de la notificacion de la resolucion
de la Junta resolviendo definitivamente la mocion cuya resolucion debera ser
emitida y archivada en autos dentro de los noventa (90) dias siguientes a la
radicacion de la mocion. Si la Junta dejare de tomar alguna accion con relacion
a la mocion de reconsideracion dentro de los noventa (90) dias de haber sido
radicada una mocion acogida para resolucion, perdera jurisdiccion sobre la misma
y el termino para solicitar la revision judicial empezara a contarse a partir de
la expiracion de dicho termino de noventa (90) dias salvo que el Tribunal, por
justa causa, autorice a la Junta una prorroga para resolver, por un tiempo
razonable.

La mocion de reconsideracion sera jurisdiccional para poder solicitar
la revision judicial.

/s/
--------------------------------
ING. PATRIA G. CUSTODIO
Presidente

CERTIFICO: Que la anterior es copia fiel y exacta de la Resolucion
adoptada y emitida en la consulta de epigrafe por la Junta de Planificacion de
Puerto Rico, en su reunion celebrada el dia January 25, 1991 y para uso general
y para su conocimiento y accion pertinenente archivo en autos y le notifico a
las partes la presente copia bajo mi firma y sello oficial de esta Junta en San
Juan, Puerto Rico, hoy

GRIZZETTE DAVILA
Secretaria

POR: /s/
-----------------------------
SUBSECRETARIA AUX

<PAGE>

Exhibit 10.25

AMENDMENT TO REIMBURSEMENT AGREEMENT

AND RATIFICATION OF GUARANTIES

THIS AMENDMENT TO REIMBURSEMENT AGREEMENT AND RATIFICATION OF
GUARANTIES (this "Amendment") is made as of the 3rd day of November, 1998, by
and among EL CONQUISTADOR PARTNERSHIP L.P., a Delaware limited partnership,
having an address at 1000 El Conquistador Avenue, Las Croabas, Fajardo, Puerto
Rico 00738 ("Borrower"), PATRIOT AMERICAN HOSPITALITY, INC., a Delaware
corporation. having an address at 590 Madison Avenue, New York, New York 10022
("Guarantor"), and CITICORP REAL ESTATE, INC., a Delaware corporation, having an
address at 599 Lexington Avenue, New York, New York 10043 ("Lender").

RECITALS:

A. Lender is the owner and holder of certain reimbursement obligations
in the principal amount of $90,000,000 (collectively, the "Reimbursement
Obligations") which are outstanding pursuant to that certain Letter of Credit
and Reimbursement Agreement, dated as of February 7, 1991, by and between The
Bank of Tokyo-Mitsubishi, Ltd. (f/k/a The Mitsubishi Bank, Limited) ("BTM") and
the Borrower (as amended by the Modification Agreement (as hereinafter defined)
and as otherwise heretofore amended, the "Reimbursement Agreement").

B. The Reimbursement Obligations are secured, in part, by certain
Collateral Pledge Agreements more particularly described in the Reimbursement
Agreement and by certain other notes, deeds of mortgage, assignments, guaranties
and other documents and instruments executed in connection with the
Reimbursement Agreement (including those documents executed in connection with
that certain Assignment and Modification Agreement dated as of August 3, 1998 by
and among the Borrower, the Lender, the Puerto Rico Industrial, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority,
Banco Popular de Puerto Rico, as trustee, and BTM (the "Modification
Agreement")) or otherwise with respect to the Reimbursement Obligations. The
term "L/C Documents", as used herein, shall have the meaning ascribed thereto in
the Reimbursement Agreement.

C. The Reimbursement Obligations are guaranteed by Guarantor pursuant to
a Guaranty dated as of August 3, 1998 in favor of Lender (the "Patriot
Guaranty") and that certain Guaranty, dated as of May 5, 1992, made by WMS
Industries Inc., Hugh Andrews, Burton I. Koffman and Richard E. Koffman for the
benefit of BTM, as assumed in part by Guarantor pursuant to that certain
Assumption of Guaranty, dated as of March 31, 1998, executed by Guarantor, and
that certain guaranty by Guarantor dated as of March 31, 1998 to assume the
obligations of KGC under paragraph 4 of the First Amendment to Letter of Credit
and Reimbursement Agreement

(the "Deficiency Loan Guaranty"; the Patriot Guaranty and the Deficiency Loan
Guaranty are hereinafter sometimes collectively referred to as the
"Guaranties").

D. The Reimbursement Obligations are due and payable in full no later
than November 3, 1998 (the "Initial Maturity Date") and Borrower has requested
that Lender extend the Initial Maturity Date to January 29, 1999 (the "Extended
Maturity Date") notwithstanding the fact that the conditions to extension of the
Initial Maturity Date as set forth in the Reimbursement Agreement have not been
satisfied; and

E. Lender has agreed to extend the Initial Maturity Date to the Extended
Maturity Date but only on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender, Borrower and Guarantor hereby agree as
follows:

1. Recitals; Definitions. The recitals set forth herein are true and
accurate and are incorporated herein by reference. Capitalized terms not
otherwise defined herein shall have the meaning ascribed thereto in the
Reimbursement Agreement.

2. Maturity Date. Section 1 of the Reimbursement Agreement is hereby
amended to delete the term "Maturity Date" and to substitute the following in
lieu thereof:

MATURITY DATE shall mean the earlier to occur of (a) January 29, 1999,
or (b) any earlier date on which the entire Reimbursement Amount is
required to be paid in full, by acceleration or otherwise, under this
Agreement or any of the other L/C Documents.

Notwithstanding anything to the contrary contained in the Reimbursement
Agreement, Borrower shall not be entitled to any further extension of the
Maturity Date beyond January 29, 1999.

3. Reserves. Notwithstanding any provision of the Reimbursement
Agreement or in the Replacement Reserve Agreement, Debt Service Reserve
Agreements or Required Repair Reserve Agreement, each dated as of August 3,
1998, between Borrower and Lender, on or before the date hereof and as a
condition to the extension of the Initial Maturity Date to the Extended Maturity
Date, Borrower has caused the cash balances in each of the following escrows and
reserves to equal the amounts set forth below:

<TABLE>
<S> <C>
Tax escrow established pursuant to
Section 7(uu) of the Reimbursement
Agreement $3,268,176

Replacement Reserve Fund created
pursuant to the Replacement Reserve
Agreement $0.00

</TABLE>

<TABLE>
<S> <C>
Debt Service Reserve Fund pursuant to
the Debt Service Reserve Agreement $1,725,000

Debt Service Reserve Fund pursuant to
the Debt Service Reserve Agreement (re
GDB Loan) $525,000
</TABLE>

4. Net Proceeds.

a. Deposit. Prior to the date hereof, Borrower has received
$3,285,575 in insurance proceeds with respect to damage to the Hotel caused by
Hurricane Georges (the "Hurricane Damage"). Of such amount, $3,285,575 has been
applied by Borrower in accordance with Draw Request No. 1 and $0.00 (the
"Deposited Amount") has been deposited by Borrower with Lender as Net Proceeds
arising as a result of the Hurricane Damage. Guarantor, Lender and other loss
payees are parties to an Insurance Escrow Agreement (the "Insurance Agreement")
dated as of October 29, 1998 which requires, among other things, that all
additional funds, based on the Borrower's Allocable Share (as set forth in the
Insurance Agreement), payable with respect to the Hurricane Damage to the Hotel
(collectively, the "Additional Deposits," and together with the Deposited
Amount, the "Net Proceeds Reserve") shall be disbursed to Lender for deposit and
disbursement in accordance with the Disbursement Procedures (as hereinafter
defined). The foregoing notwithstanding and provided that no Event of Default or
Default shall have occurred and be continuing, Lender agrees that upon receipt
of written request from Borrower and Guarantor, Lender shall disburse $1,875,571
from Additional Deposits made after the date hereof (the "Available Insurance
Funds") to or as directed by Guarantor to be applied to repay a portion of the
loan made by Guarantor to Borrower on the date hereof in the amount of
$3,308,917 (the "Patriot Subordinated Loan"). Borrower and Guarantor acknowledge
and agree that the Patriot Subordinated Loan is unsecured, may be repaid only
from and to the extent of any Available Insurance Funds and from any Available
Tax Funds (as hereinafter defined) as

provided in Section 7 hereof and, subject to repayment as provided herein, is
fully subordinated to the Reimbursement Obligations in all respects.

b. Net Proceeds Reserve Fund. Upon receipt of the Deposited
Amount and each of the Additional Deposits, Lender shall deposit the same in an
interest-bearing escrow account (the "Net Proceeds Reserve Fund"). Borrower
hereby acknowledges and confirms that (i) the Net Proceeds Reserve Fund shall
not constitute a trust fund and may be commingled with other monies held by
Lender; (ii) Lender or its designee shall have the sole right to make
withdrawals from the Net Proceeds Reserve; and (iii) Lender shall have no
responsibility or liability for the amount of interest earned on the Net
Proceeds Reserve. All interest earned from investment of the funds deposited in
the Net Proceeds Reserve Fund shall be credited to the Net Proceeds Reserve
Fund. Borrower shall include and report such interest in its income for Federal,
state, commonwealth and local income and franchise tax purposes.

c. Security Interest. As additional security for the payment of
the Reimbursement Obligations and all other sums due under the L/C Documents and
the performance by Borrower of its obligations thereunder, Borrower hereby
pledges, assigns and grants to Lender a continuing perfected security interest
(to the extent Lender maintains possession of same) in and to and a first lien
upon, the Net Proceeds Reserve Fund and the Net Proceeds Reserve; provided that,
Lender shall make disbursements from the Net Proceeds Reserve in accordance with
the Disbursement Procedures.

d. Net Proceeds Default. Borrower shall be in default under the
Reimbursement Agreement if it fails to make when due any Additional Deposit or
other payment required pursuant to the Disbursement Procedures. Upon the
occurrence of such a default and during the continuance thereof, in addition to
the remedies specified in the Reimbursement Agreement, Lender shall be able to
exercise all of its rights and remedies under any or all of the L/C Documents.
If Borrower defaults on any payment due under the Reimbursement Agreement or any
of the other L/C Documents, or if Borrower defaults under any other provision in
the L/C Documents, then, upon any such default and during the continuance
thereof, Borrower shall not be entitled to receive any funds from the Net
Proceeds Reserve Fund and Lender may, in its sole and absolute discretion, use
the Net Proceeds Reserve (or any portion thereof) for any purpose permitted
under the L/C Documents, including, but not limited to (i) payment of all or any
portion of the Reimbursement Obligations and other amounts due under the L/C
Documents; provided, however, that such application of funds shall not cure or
be deemed to cure any default; (ii) reimbursement of Lender for all losses and
expenses (including, without limitation, reasonable legal fees) suffered or
incurred by Lender as a result of such default; and/or (iii) payment of any
amount expended in exercising any of the rights and remedies available to Lender
under the L/C Documents, at law or in equity, all in such order, proportion and
priority as Lender may determine in its sole and absolute discretion. Lender's
right to withdraw and apply the Net Proceeds Reserve Fund as provided herein
shall be in addition to all other rights and remedies provided to Lender under
the L/C Documents at law or in equity.

e. Insufficient Funds in the Net Proceeds Reserve Fund. The
insufficiency of any balance in the Net Proceeds Reserve Fund for the completion
of the Restoration (as defined on Schedule 1 hereto) shall not relieve Borrower
from its obligations under the Reimbursement Agreement or any of the other L/C
Documents.

5. Restoration After Casualty.

a. Proceeds Made Available. Notwithstanding anything to the
contrary contained in the Reimbursement Agreement or in any of the other L/C
Documents, the Net Proceeds Reserve shall be disbursed in accordance with the
terms, provisions and conditions set forth in Schedule 1 attached hereto and
made a part hereof (collectively, the "Disbursement Procedures") or as may
otherwise be approved by Lender in its sole and absolute discretion.

b. Lender's Costs and Expenses. Borrower acknowledges that Lender
may deduct Lender's reasonable costs and expenses of collecting the Net
Proceeds, including, without limitation, attorneys fees and expenses, from the
Net Proceeds Reserve Fund.

c. Re-Opening for Business. Borrower's failure to cause, on or
before December 31, 1998, all guest rooms, the casino, pool and other amenities
of the Hotel to be fully re-open so as to permit Borrower to conduct its
business in the manner in which such business was conducted prior to the
Hurricane Damage shall constitute an Event of Default under the

Reimbursement Agreement without notice or demand and without the benefit of any
grace period provided for in any L/C Document.

d. Project Schedule. Borrower's failure to deliver to Lender, on
or before November 30, 1998, a detailed project schedule for completion of the
Restoration, which schedule must be consistent with Borrower's obligation to
re-open for business as provided in Paragraph 5(c) above, shall constitute an
Event of Default under the Reimbursement Agreement without notice or demand and
without the benefit of any grace period provided for in any L/C Document.

6. Insurance Reserve.

a. Deposits. Borrower has deposited with Lender the amount of
$2,000,000.00 (the "Initial Insurance Deposit") as additional collateral for
payment of all costs incurred or required in connection with completion of the
Restoration. Borrower shall deposit with Lender an additional $5,500,000 in two
installments of $1,833,333.33 and one installment of $1,833,333.34 (each, an
"Additional Insurance Deposit") on each of December 1, 1998, December 22, 1998
and January 12, 1999, respectively (each, an "Insurance Reserve Deposit Date").
The Initial Insurance Deposit and Additional Insurance Deposits are collectively
referred to herein as the "Insurance Reserve". No portion of the Insurance
Reserve shall be advanced to Borrower except upon satisfaction of each of the
following conditions (collectively, the "Termination Conditions"): (i) no Event
of Default or Default shall exist and (ii) Borrower shall have satisfied, or
with an application of the funds in the Insurance Reserve shall satisfy, all of
the

requirements for the final Disbursement for the Restoration as required in
Schedule 1 hereto. Borrower's failure to deposit with Lender any Additional
Insurance Deposit on the applicable Insurance Reserve Deposit Date shall
constitute an Event of Default under the Reimbursement Agreement without notice
or demand and without the benefit of any grace period provided for in any L/C
Document.

b. Insurance Reserve Fund. Lender shall deposit the Insurance
Reserve in an interest-bearing escrow account (the "Insurance Reserve Fund").
Borrower hereby acknowledges and confirms that (i) the Insurance Reserve shall
not constitute a trust fund and may be commingled with other monies held by
Lender; (ii) Lender or its designee shall have the sole right to make
withdrawals from the Insurance Reserve Fund; and (iii) Lender shall have no
responsibility or liability for the amount of interest earned on the Insurance
Reserve. All interest earned from investment of the funds deposited in the
Insurance Reserve Fund shall be credited to the Insurance Reserve Fund. Borrower
shall include and report such interest in its income for Federal, state,
commonwealth and local income and franchise tax purposes.

c. Security Interest. As additional security for the payment of
all sums due under the L/C Documents and the performance by Borrower of its
obligations thereunder, Borrower hereby pledges, assigns and grants to Lender a
continuing perfected security interest (to the extent Lender maintains
possession of same) in and to and a first lien upon, the Insurance Reserve Fund
and the Insurance Reserve.

d. Default. If Borrower defaults on any payment due under the
Reimbursement Agreement or any of the other L/C Documents, or if Borrower
defaults under any other provision in the L/C Documents, then, upon any such
default and during the continuance thereof, Borrower shall not be entitled to
receive any funds from the Insurance Reserve and Lender may, in its sole and
absolute discretion, use the Insurance Reserve (or any portion thereof) for any
purpose permitted under the L/C Documents, including, but not limited to (i)
payment of all or any portion of the Reimbursement Obligations and other amounts
due under the L/C Documents; provided, however, that such application of funds
shall not cure or be deemed to cure any default; (ii) reimbursement of Lender
for all losses and expenses (including, without limitation, reasonable legal
fees) suffered or incurred by Lender as a result of such default; and/or (iii)
payment of any amount expended in exercising any of the rights and remedies
available to Lender at law or in equity or under the L/C Documents, all in such
order, proportion and priority as Lender may determine in its sole discretion.
Lender's right to withdraw and apply the Insurance Reserve Fund as provided
herein shall be in addition to all other rights and remedies provided to Lender
under the L/C Documents and at law or in equity.

e. Insufficient Funds in the Insurance Reserve Fund. The
insufficiency of any balance in the Insurance Reserve Fund shall not relieve
Borrower from its obligations under the Reimbursement Agreement or any of the
other L/C Documents.

7. Tax Escrow. Notwithstanding anything to the contrary contained in the
Reimbursement Agreement, if Borrower shall hereafter deliver to Lender written
confirmation, in form reasonably acceptable to Lender, from the Municipal
Revenue Collection Center ("CRIM")

of the maximum amount of Taxes which are claimed by CRIM to be due and payable
with respect to the Hotel for the fiscal years 1994-95 through 1998-99 (the
"Maximum Tax Amount"), then, to the extent that the Maximum Tax Amount is less
than the amount then on deposit in the tax escrow established under Section
7(uu) of the Reimbursement Agreement (the "Tax Escrow Balance"), provided that
no Event of Default or Default shall have occurred and be continuing, Lender
shall, upon receipt of written request from Borrower and Guarantor, disburse an
amount equal to the lesser of (i) the positive difference between the Tax Escrow
Balance and the Maximum Tax Amount (the "Available Tax Funds") and (ii)
$1,433,346, to or as directed by Guarantor to be applied to repay a portion of
the Patriot Subordinated Loan; provided, further, that, in the event that the
amount of the Available Tax Funds exceeds $1,433,346, provided that no Event of
Default or Default shall have occurred and be continuing, Lender shall disburse
such excess funds to Borrower upon Borrower's written request therefor. Further,
notwithstanding anything to the contrary contained in Section 7(uu) of the
Reimbursement Agreement, Lender shall, upon the written request of the Borrower
and upon receipt of a final tax bill or other evidence reasonably satisfactory
to Lender that Borrower and CRIM have agreed upon the amount of Taxes due and
payable for fiscal years 1994-95 through 1998-99 (collectively, the "Tax Payment
Documents"), disburse directly to CRIM (in accordance with payment instructions
provided by CRIM), to the extent of any funds then held by Lender pursuant to
Section 7(uu) of the Reimbursement Agreement, the agreed upon tax payment, such
disbursement to be made by

Lender within the time period required by CRIM but no sooner than five (5)
Business Days following Lender's receipt of the Tax Payment Documents.

8. References. All references in the Reimbursement Agreement and each of
the other L/C Documents to the Reimbursement Agreement shall mean and refer to
the Reimbursement Agreement, as amended hereby.

9. Outstanding Indebtedness. Borrower and Guarantor represent and
warrant to Lender that, as of the date hereof, the outstanding principal balance
of the Reimbursement Obligations is $90,000,000 and that interest has been paid
through October 31, 1998.

10. Confirmation of Representations and Warranties. Except as set forth
in Schedule 2 hereto, each of Borrower and Guarantor hereby represents and
warrants to Lender that each of the representations and warranties of Borrower
or Guarantor, as the case may be, contained in the Modification Agreement and
each of the Additional Security Documents ( as such term is defined in the
Modification Agreement) to which it is a party are true, correct and complete as
of the date hereof and apply to the execution and delivery of this Amendment and
any other documents executed in connection herewith.

11. No Defenses. Each of Borrower and Guarantor hereby acknowledges,
confirms and warrants to Lender that as of the date hereof it has no defenses,
claims, rights of set-of or counterclaims against Lender under, arising out of,
or in connection with, this Amendment, the Reimbursement Agreement, the
Reimbursement Obligations, the Guaranties or any of the other L/C Documents, or
against any of the indebtedness evidenced, advanced or secured thereby or

under any other documents executed in connection therewith or relating thereto,
any and all of which Borrower and Guarantor hereby expressly waive.

12. Release. Each of Borrower and Guarantor acknowledges that it is
executing this Amendment as its own voluntary act and free from duress and undue
influence and upon and with the advice of counsel. Each of Borrower and
Guarantor hereby unconditionally and irrevocably forever releases, acquits and
discharges Lender, its predecessors, subsidiaries and affiliates and their
respective employees, officers, directors, shareholders, agents, servants and
counsel (collectively, the "Related Parties") from any and all claims, demands,
actions, causes of actions, suits, debts, costs, dues, sums of money, accounts,
bonds, bills, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments expenses and liabilities whatsoever,
known or unknown, at law or in equity, irrespective of whether such claims arise
out of contract, tort, violation of laws or regulations or otherwise, which
Borrower or Guarantor ever had, now has or hereafter can, shall or may have
against Lender or any of the Related Parties for, upon, or by reason of any
matter, cause or thing whatsoever from the beginning of the world to and
including the date hereof arising out of, in connection with, or related in any
manner to the Hotel, the Reimbursement Obligations, the Mortgaged Property (as
hereinafter defined), the Reimbursement Agreement, this Amendment, the
Guaranties or any of the other L/C Documents.

13. Confirmation of Mortgages and Liens.

a. Borrower acknowledges and agrees that the Fee Mortgage and
the Second Fee Mortgage (collectively, the "Fee Mortgages") constitute and
continue to be valid first mortgage liens and security interests upon the
Mortgaged Property (as defined therein) in favor of Lender, as the assignee of
BTM under the Collateral Pledge Agreement and the Second Collateral Pledge
Agreement, (collectively, the "Collateral Pledge Agreements"), and as the holder
of the Notes and the holder of the rights of BTM under the Reimbursement
Agreement, subject only to permitted encumbrances as provided therein, that the
obligations of the Borrower under the Reimbursement Agreement, as modified
hereby, are secured by, among other things, the Collateral Pledge Agreements,
the Notes, the Fee Mortgages and that the Fee Mortgages and each of the other
L/C Documents constitute valid and subsisting agreements and obligations of the
Borrower. Nothing herein is intended to, nor shall it, constitute a novation of
the indebtedness secured by the Collateral Pledge Agreements, the Notes or the
Fee Mortgages. The Mortgaged Property (as defined in each of the Fee Mortgages,
respectively) is and shall remain subject to and encumbered by the lien, charge
and encumbrance of the applicable Fee Mortgage, and nothing herein contained
shall affect or be construed to affect the lien or encumbrance of either of the
Fee Mortgages or the priority thereof over other liens or encumbrances.

b. The Borrower acknowledges and agrees that the Leasehold
Mortgage constitutes, and continues to be, a valid first mortgage lien and
security interest upon the Mortgaged Property (as defined therein) in favor of
Lender, as assignee of BTM under the Collateral Pledge Agreements and as the
holder of the Notes and the holder of the rights of BTM

under the Reimbursement Agreement, subject only to permitted encumbrances as
provided therein, that the obligations of the Borrower under the Reimbursement
Agreement, as modified hereby, are secured by, among other things, the
Collateral Pledge Agreements, the Notes and Leasehold Mortgage, and that the
Leasehold Mortgage and each of the other L/C Documents, constitute valid and
subsisting agreements and obligations of the Borrower. Nothing herein is
intended to, nor shall it, constitute a novation of the indebtedness secured by
the Collateral Pledge Agreements, the Notes or the Leasehold Mortgage. The
Mortgaged Property (as defined in the Leasehold Mortgage) is and shall remain
subject to and encumbered by the lien, charge and encumbrance of the Leasehold
Mortgage, and nothing herein contained shall affect or be construed to affect
the lien or encumbrance of the Leasehold Mortgage or the priority thereof over
other liens or encumbrances.

14. Consent and Reaffirmation. Guarantor hereby confirms its obligations
under each of the Guaranties and any other L/C Document to which it is a party
and consents to the terms of this Amendment and the transactions contemplated
herein. Nothing contained in this Amendment or any of the other L/C Documents or
any of the transactions contemplated herein or thereby shall be deemed to waive,
release, or limit any obligation of the Guarantor relating to or otherwise
connected with the Guaranties or any of the other L/C Documents, as modified
hereby. Nothing herein is intended to, nor shall it, constitute a novation of
the indebtedness secured by

the Guaranties. Except as expressly set forth in this Amendment, nothing herein
is intended to nor shall it expand the liability of Guarantor under the
Guaranties.

15. Affiliate Loans and Other Indebtedness. The Guarantor and Borrower
acknowledge and agree that any loan made by Guarantor (or any affiliate
thereof), directly or indirectly, to Borrower on or after August 3, 1998 and
outstanding on the date hereof (including, without limitation, that certain
unsecured loan in the amount of up to $5,000,000 made by Guarantor to Borrower
on or about August 3, 1998) shall be re-characterized on the books of the
Borrower and Guarantor (or affiliate) as a partnership contribution by one or
more of Borrower's partners to Borrower for all purposes and shall under no
circumstances constitute indebtedness of the Borrower. Except for the Patriot
Subordinated Loan, no further indebtedness shall be created or incurred by the
Borrower other than as expressly permitted in the L/C Documents. After the date
hereof, any and all monies funded, directly or indirectly, to the Borrower by
Guarantor (or any affiliate thereof), except to the extent such funding
represents repayment of indebtedness due Borrower, shall be funded as a
partnership contribution to the Borrower for all purposes and shall under no
circumstances constitute indebtedness of the Borrower.

16. Expenses of Transaction. Simultaneously upon the execution of this
Amendment, Borrower and Guarantor shall pay all fees, costs, expenses and
disbursements of Lender and Lender's counsel in connection with the preparation,
execution and delivery of this Amendment and each of the other documents
executed in connection herewith and in connection with the transactions
contemplated hereby.

17. No Oral Modification. This Amendment may not be amended except upon
the written agreement of all of the parties hereto.

18. Ratification. Except as expressly modified and amended herein, each
of Borrower and Guarantor covenants and agrees that all of the terms, covenants,
promises, warranties, representations and conditions of the Reimbursement
Agreement, the Guaranties, and each of the other L/C Documents shall remain in
full force and effect with respect to the Borrower and Guarantor. Borrower
hereby ratifies and confirms each of its obligations under the Reimbursement
Agreement, as modified hereby, and each of the other L/C Documents. Guarantor
hereby ratifies and confirms each of its obligations under the Guaranties and
each of the other L/C Documents to which it is a party.

19. Binding Upon Successors and Assigns. This Amendment shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and permitted assigns under the Reimbursement Agreement.

20. Headings. The headings of the sections and subsections of this
Amendment are for convenience of reference only and shall not be considered a
part hereof nor shall they be deemed to limit or otherwise affect any of the
terms or provisions hereof.

21. Validity of Provisions. Any provision of this Amendment which may
prove unenforceable under law shall not affect the validity of the other
provisions hereof.

22. Judicial Interpretation. Should any provision of this Amendment, the
Reimbursement Agreement or any of the L/C Documents require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any party by reason of the rule of construction that a
document is to be construed more strictly against the party who itself or
through its agent prepared the same, it being agreed that all parties hereto
have participated in the preparation of this Amendment.

23. Time; Construction; Exhibits and Schedules. Time is of the essence
of each provision of this Amendment. All references to the singular or plural
number or masculine, feminine or neuter gender shall, as the context requires,
include all others. All references to sections, paragraphs, and exhibits are to
this Amendment unless otherwise specifically noted. The use of the words
"hereof", "hereunder", "herein" and words of similar import shall refer to this
entire Amendment and not to any particular section, paragraph or portion of this
Amendment unless otherwise specifically noted. All exhibits and schedules
attached hereto are by this reference made a part of this Amendment for all
purposes.

24. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement. It shall not be necessary for the same counterpart to
be signed by all of the parties in order for this instrument to be fully binding
upon any party signing at least one counterpart.

25. Governing Law. THIS AMENDMENT SHALL BE GOVERNED, CONSTRUED, APPLIED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

26. Conflicting Provisions. In the event of any conflict between this
Amendment and the terms of the Reimbursement Agreement or any of the other L/C
Documents, the terms of this Amendment shall govern and control. Whenever
possible, the provisions of this Amendment shall be deemed supplemental to and
not in derogation of the terms of the Reimbursement Agreement and the other L/C
Documents.

27. Entire Agreement. This Amendment and the documents executed and
delivered in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof, and all understandings (oral
or written) and agreements heretofore had among the parties are merged in or
contained in this Amendment and such documents.

28. Facsimile Execution. Delivery of an executed counterpart of a
signature page to this Amendment by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Amendment.

29. Waiver of Jury Trial. LENDER, BORROWER AND GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND
INTENTIONALLY FOREVER WAIVE THE RIGHT TO A TRIAL BY JURY IN

RESPECT OF ANY LITIGATION BASED ON THIS AMENDMENT OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AMENDMENT, THE REIMBURSEMENT AGREEMENT, OR ANY OTHER
DOCUMENTS EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY OR THE EXERCISE BY ANY PARTY OF ITS RIGHTS UNDER THIS AMENDMENT OR
ANY OF THE OTHER L/C DOCUMENTS OR IN ANY WAY ARISING OUT OF OR RELATED IN ANY
MANNER WITH THE HOTEL OR THE SUBJECT MATTER HEREOF OR THEREOF (INCLUDING,
WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AMENDMENT OR ANY OF THE
L/C DOCUMENTS AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AMENDMENT OR ANY
OTHER L/C DOCUMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE);
BORROWER AND GUARANTOR ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR
LENDER TO ENTER INTO AND ACCEPT THIS AMENDMENT.

[THE REMAINDER OF THIS PAGE IS LEFT BLANK]

IN WITNESS WHEREOF, THIS AMENDMENT has been executed by Borrower,
Guarantor and Lender as of the day and year first above written.

BORROWER:

EL CONQUISTADOR PARTNERSHIP, L.P., a Delaware limited
partnership

By: Conquistador Holding, Inc., a Delaware
corporation, its general partner

By: /s/ Larry Vitale
-------------------------------
Larry Vitale
Vice President

LENDER:

CITICORP REAL ESTATE, INC., a Delaware corporation

By: /s/ David Hirsh
------------------------------
David Hirsh
Authorized Signatory

GUARANTOR:

PATRIOT AMERICAN HOSPITALITY, INC.

By: /s/ Larry Vitale
-------------------------------
Larry Vitale
Vice President

SCHEDULE 1

Disbursement Procedures

This Schedule 1 (all terms, provisions and conditions set forth herein
being collectively referred to as the "Disbursement Procedures") is attached to
and forms an integral part of that certain Amendment to Reimbursement Agreement
and Ratification of Guaranties dated as of November 3, 1998 by and among the
Borrower, the Guarantor and the Lender (the "Amendment"). All initially
capitalized terms used herein, unless otherwise specifically defined herein,
shall have the respective meanings assigned to such terms in the Amendment or,
if not otherwise specifically defined in the Amendment, in the Reimbursement
Agreement, as modified by the Amendment.

Section 1. Amount of Disbursements. Disbursements for the payment of
costs of labor, materials, and services supplied for the Restoration shall be
made by Lender, not more frequently than twice per calendar month (except as
otherwise specifically provided in Section 2(i) hereof), upon compliance by
Borrower with the Disbursement Procedures after actual commencement of the
Restoration for work actually completed during the preceding period or as
otherwise approved by Lender in its sole and absolute discretion. From time to
time, Borrower shall submit a Request for Disbursement to Lender requesting a
Disbursement for the payment of costs of labor, materials, and services supplied
or, subject to the approval of the Lender, to be

supplied, for the Restoration or for the payment of other costs and expenses
incident thereto, and specified in the Approved Construction Budget. All costs
for which a Disbursement is requested shall be evidenced by invoices or other
documentation acceptable to Lender submitted with the Request for Disbursement.
Lender may require an inspection of and favorable report on the Restoration and
review of the Request for Disbursement by Lender's Engineer prior to making any
Disbursement. Prior to each Disbursement, Borrower shall have furnished to
Lender and Lender shall have received and approved all of the documents,
materials and information required pursuant to this Schedule 1, including
without limitation, the Request for Disbursement, the Project Summary, the
Project Budget Reallocation Request, if applicable, and the change orders
contained therein (if applicable) and the projected disbursement schedule.
Disbursements for payment of costs of the Restoration shall not exceed the
aggregate of (a) the costs of labor, materials, and services incorporated (or,
as approved by the Lender, to be incorporated) into the Restoration in a manner
acceptable to Lender, plus (b) if approved by Lender, the purchase price of all
uninstalled materials to be utilized in the Restoration stored at the Hotel, or
elsewhere with the written consent of, and in a manner acceptable to, Lender,
less (c) retainage, if any, as set forth in Section 6 hereof, and less (d) all
prior Disbursements for payment of costs of labor, materials, and services with
respect to the Restoration. Each Request for Disbursement shall be submitted by
Borrower to Lender a reasonable time (but not less than five Business Days)
prior to the date on which a Disbursement is desired by Borrower, and Lender
shall make such Disbursement no later than five Business Days after receipt of a
complete Request for

Disbursement, subject to Lender's determination that the Request for
Disbursement satisfies the requirements set forth herein.

Section 2. Conditions Precedent to Disbursement of Net Proceeds Reserve.
Lender will have no obligation to make any disbursements of the Net Proceeds
Reserve (each, a "Disbursement" and collectively, the "Disbursements") unless
each and all of the following conditions precedent has been satisfied in a
manner satisfactory to Lender and the Lender's Engineer (sometimes collectively
referred to herein as the "Disbursement Conditions"):

(a) Borrower has submitted to and Lender has reviewed and
approved (i) any and all applicable Plans and Specifications for that
portion of the Restoration for which a Disbursement is being requested;
(ii) the Construction Manager's Agreement, (iii) the initial Approved
Construction Budget, and (iv) any building permits or permits and all
other approvals required by the Authorities with respect to that portion
of the Restoration for which a Disbursement is being requested.

(b) All Disbursement Procedures and other conditions provided
elsewhere in the Amendment or in the Reimbursement Agreement, as
modified by the Amendment, as a condition to any Disbursement have been
satisfied as determined by Lender in its sole and absolute discretion;

(d) Borrower shall deliver to Lender or its designated
representative a Request for Disbursement, requesting such Disbursement
at least five Business Days prior to the Business Day each Disbursement
is requested to be made;

(e) With respect to Disbursements relating to those portions of
the Restoration which are included within the scope of work described in
the Construction Manager's Agreement, the Construction Manager shall
deliver to Lender an Application and Certificate for Payment (AIA
Document G 702) together with accurate and complete Continuation Sheets
(AIA Document G 703) and a General Contractor's Affidavit in the form of
Exhibit "4" attached hereto, each dated within five (5) days of the
Request for Disbursement;

(f) Construction Manager and each Major Subcontractor (and any
other Subcontractor as requested by the Lender) supplying materials or
labor to the Hotel shall deliver to Lender an executed and acknowledged
cumulative lien release or waiver releasing or waiving all rights to
constitutional, statutory, contractual or common law Liens against the
Hotel for all labor or materials so supplied for all sums previously
funded to Borrower for payment to the Construction Manager or each such
Subcontractor;

(g) With respect to any Disbursements relating to the portion of
the Restoration more particularly described on Annex A attached hereto
(collectively, the "Construction Work"), Architect shall submit an
Architect's Certificate that the Construction Work is

being constructed in accordance with any applicable Plans and
Specifications therefor and in accordance with all applicable laws,
and the other information set forth in the Architect's Certificate;

(h) The requested Disbursement is within the Line Item limits,
both cumulatively and as to each particular payment to be funded under
the Disbursement, specified in the Approved Construction Budget and
consistent with Lender's inspection reports;

(i) No more than one other Disbursement shall have been made in
the same calendar month; provided, however, that weekly Disbursements
shall be permitted during the first 6 weeks following the date hereof;

(j) Such Disbursement, unless it is the final Disbursement (in
which case no minimum amount shall be required), shall be in an amount
not less than $500,000;

(k) Each Disbursement pertains to work that has been completed
or has otherwise been approved by Lender;

(l) All other conditions of the Reimbursement Agreement, as
amended by the Amendment, and the other L/C Documents have been
satisfied; and

(m) All matters related to such Disbursement are reasonably
satisfactory to Lender and its counsel.

Section 3. Additional Documents and Conditions for Disbursements.

(a) If requested by Lender, Borrower shall deliver to Lender
evidence substantiating any of the matters contained in this Schedule 1
which are necessary to enable Borrower to qualify for such Disbursement.
Lender, at its election, may make any Disbursement without having
received all items to be delivered as a condition precedent thereto,
but such action by Lender shall not be deemed to be a waiver of the
requirement that each such item be delivered as a condition precedent
to any subsequent Disbursement.

(b) Any Disbursement Conditions not satisfied on or prior to the
date of the Amendment or separately provided for in this Schedule 1 must
be supplied to and approved by Lender prior to any Disbursement of the
Net Proceeds Reserve.

(c) Notwithstanding anything to the contrary contained herein,
in the Amendment, the Reimbursement Agreement or any of the other L/C
Documents, Lender shall have no obligation to advance any of its own
funds for the completion of the Restoration and shall make Disbursements
only to the extent of available funds in the Net Proceeds Reserve Fund
and only upon satisfaction of the conditions for such disbursement as
provided herein.

Section 4. Direct Disbursements. With respect to the portion of each
Disbursement that is to be used to make payments to Persons, Lender may make
such portion of such Disbursement directly to each such Person, and the
execution of the Amendment by Borrower constitutes an irrevocable direction and
authorization to so advance, at the election of Lender.

No further direction or authorization from Borrower shall be necessary to make
such direct Disbursement to each such Person, and all such direct Disbursements
shall satisfy the obligations of Lender hereunder as if made directly to
Borrower, regardless of the disposition thereof by such Person.

Section 5. Conditions Precedent to Final Disbursement. In addition to
the conditions precedent stated elsewhere in this Schedule 1, Lender shall not
be obligated to make the final Disbursement for the Restoration until Lender
receives (or has previously received) each of the following with respect to the
Hotel:

(a) Evidence that all of the Substantial Completion requirements
have been satisfied;

(b) All bills for labor and material with respect to the
Restoration have been paid in full or adequate reserves satisfactory to
Lender have been established for payment of such bills;

(c) Certificate by both the Architect (if applicable) and
Lender's Engineer stating that the Restoration has been fully completed;

(d) All necessary completion documents as required herein or as
otherwise requested by Lender;

(e) Full and unconditional lien waivers or releases executed by
the Architect (if applicable), the Construction Manager, each
Subcontractor and Materialmen that has worked on the Restoration; and

(f) Approval of the sureties under any bonds.

Section 6. Retainages. With respect to that portion of each Disbursement
that is used to pay costs of the Restoration (other than professional fees,
non-construction related or "soft" costs and all fees, costs and expenses
payable by Borrower to Lender), Lender shall retain an amount equal to ten
percent (10%) of such Disbursement (each, the "Retainage"), as retainage for
completion of the Restoration. Lender will release the portion of the Retainage
being held with respect to the Construction Manager, Subcontractor or
Materialman engaged in the Restoration as of the date upon which the Lender's
Engineer certifies to Lender that the Construction Manager, Subcontractor or
Materialman has satisfactorily completed all work and has supplied all materials
in accordance with the provisions of the Construction Manager's Agreement,
Subcontractor's or Materialman's Contract, and the Construction Manager,
Subcontractor or Materialman delivers the lien waivers or releases and evidence
of payment in full of all sums due to the Construction Manager, Subcontractor or
Materialman as may be reasonably requested by Lender or by the title company
insuring the liens of the Fee Mortgages and Leasehold Mortgage (collectively,
the "Mortgages"). If required by Lender, the release of any such portion of the
Retainage shall be approved by the surety company, if any, which has issued a
payment and performance bond with respect to the Construction Manager,
Subcontractor or Materialman.

Section 7. Reallocation of Approved Construction Budget. Lender reserves
the right to make Disbursements which are allocated to any of the designated
items in the Approved Construction Budget for such other purposes or in such
different proportions as Lender may deem necessary or advisable under the
circumstances. Borrower may not reallocate items of cost or change the Approved
Construction Budget without the prior written consent of Lender. Any Cost
Savings in one budgeted Line Item may, with the approval of Lender, which
approval shall not be unreasonably withheld, be reallocated to another budgeted
Line Item.

Section 8. Payment and Performance Bonds; Insurance. A payment and
performance bond in an amount equal to at least 100% of the contract price with
respect to each Major Subcontract shall be required from the respective
Subcontractor and said payment and performance bond shall name Lender as a dual
obligee and shall be in form and content and issued by a company doing business
in the Commonwealth of Puerto Rico, all to the satisfaction of the Lender. In
addition, each such Subcontractor shall provide evidence of comprehensive
general public liability insurance, with a broad form contractual liability
endorsement insuring all obligations of such Subcontractor under its
Subcontract, with a combined single limit of not less than $1,000,000 per
occurrence for bodily injury and property damage, insuring such Subcontractor
and naming the Borrower and the Lender as additional insureds against any
injuries or damage to persons or property that may result from or are related to
work performed by such Subcontractor; such comprehensive general public
liability insurance shall be written on forms as Lender shall approve and by
insurance companies licensed in Puerto Rico and

acceptable to Lender. The Construction Manager shall not enter into any
Subcontract for which such a payment and performance bond and insurance, if
required hereunder, has not been provided without the prior written consent of
the Lender and the Lender's Engineer.

Section 9. Construction-Related Covenants. Borrower shall comply with
each of the following covenants:

(a) Commencement and Manner of Construction. Lender and Borrower
acknowledge that the Restoration has been commenced. Borrower shall
cause the Restoration to be prosecuted with diligence and continuity to
completion and in accordance with a completion schedule acceptable to
Lender and substantially in accordance with any and all Plans and
Specifications, and in full compliance with all applicable laws, good
building practices, all applicable restrictive covenants and similar
restrictions, the L/C Documents and the Approved Construction Budget.

(b) Inspection of Restoration. At all reasonable times and upon
reasonable notice, whether before or after completion of the
Restoration, Borrower shall permit Lender, Lender's Engineer and/or its
representatives to inspect the Hotel and the Restoration and any
location where materials intended to be utilized in the Restoration are
stored, and to examine all detailed plans and drawings that are or may
be kept at the construction site.

(c) Correction of Defects. Borrower shall correct or cause to be
corrected (a) any material defect in the Restoration, (b) any material
departure in the Restoration from the Plans and Specifications or the
requirements of any applicable laws or (c) any

encroachment by any part of the Restoration or any other structure
located on the Land on any building line, easement, property line, or
restricted area.

(d) Change Orders.

(i) Borrower shall promptly furnish to Lender true and
correct copies of all changes, amendments, or supplements to the
Plans and Specifications, the Approved Construction Budget, or of
the Construction Manager's Agreement, and Borrower shall not be
permitted to make any such changes, amendments, or supplements in
violation hereof.

(ii) Any and all Cost Savings realized by Borrower on any
items set forth in the Approved Construction Budget shall be
added to the Line Item entitled "Contingency" in the Approved
Construction Budget (such amounts in such line item being
hereinafter referred to as the "Contingency Amount"). The
Contingency Amount may be used to pay for any items set forth in
the Approved Construction Budget to the extent approved by Lender
in writing (which approval shall not be unreasonably withheld).

(e) Storage of Materials. Borrower shall cause all materials
supplied for, or intended to be utilized in, the Restoration, but not
affixed to or incorporated into the Improvements or the Hotel, to be
stored at the Hotel, or at such other location as may be approved by
Lender in writing, with adequate safeguards to protect Lender's security

therein and to prevent loss, theft, damage, or commingling with other
materials or projects. Unless Lender, in its sole and absolute
discretion, shall otherwise agree in writing, Lender shall have no duty
to make any Disbursement for any such materials until they are otherwise
incorporated into the Improvements.

(f) Subcontracts. Each Subcontract shall provide that it may,
and on demand by Lender to Construction Manager will, be assigned to
Lender by instruments Lender may deem necessary to effectuate such
assignment, and that on demand by Lender, the Subcontractor will perform
thereunder for the benefit of Lender.

(g) Construction Contracts. Except for those contracts more
particularly described on Annex B attached hereto and made a part hereof
and except for any contracts approved by the Insurance Adjuster,
Borrower shall become party to no contract, including the Construction
Manager's Agreement, for the performance of any work with respect to the
Restoration or for the supplying of any labor, materials, or services
for the Restoration except upon such terms and with such parties as
shall be approved in writing by Lender. The Construction Manager's
Agreement shall provide that all liens of the Construction Manager are
subordinate to the Mortgages and shall require all Subcontracts to
contain a provision subordinating the Subcontractors' liens to the
Mortgages. The Construction Manager's Agreement shall also provide that
no change orders to the Plans and Specifications for the Restoration
shall be effective without the prior written approval of Lender and
Lender's Engineer. No approval by Lender of any

construction contract or change order shall make Lender responsible
for the adequacy, form, or content of such construction contracts or
change orders.

(h) Material Changes. Borrower shall not make or permit to be
made any Material Change in any Plans and Specifications or the Approved
Construction Budget or execute, or permit the execution of, any change
orders with respect to any of the same, which would result in a
Material Change without Lender's prior written consent, which consent
may be withheld for any reason in Lender's sole and absolute
discretion.

(i) List of Contractors. Borrower shall deliver to Lender
simultaneously with each Request for Disbursement correct lists of all
Subcontractors and Materialmen employed in connection with the
Restoration. Borrower shall further deliver to Lender from time to time
not later than 30 days after Lender's demand therefor correct copies of
all contracts with Subcontractors and Materialmen. Each such list shall
show the name, address and telephone number of each such Subcontractor
and Materialman, a general statement of the nature of the work to be
done, the labor and materials to be supplied, the approximate dollar
value of such labor, work and materials itemized with respect to each
Subcontractor and Materialman, and the unpaid portion and status of such
work or whether such materials have been delivered. In the event that
Lender determines that any information provided to Lender is incomplete,
Lender shall have the right, without either the obligation or the duty,
to contact directly each such Subcontractor and Materialman to

verify the facts disclosed by such list or reflected in the relevant
contract or any other information provided by Borrower or relating to
the Hotel.

(j) Permits and Warranties. Borrower shall deliver to Lender
from time to time copies of: (i) all building and other permits,
approvals, and authorizations required in connection with the
Restoration and the reoccupancy of the Hotel promptly upon issuance and
receipt by Borrower thereof, and in any event before any act is done
which requires the issuance of the respective permit, approval or
authorization, and (ii) upon the request of Lender, all warranties and
guarantees received from any Person furnishing labor, materials,
equipment, fixtures or furnishings in connection with the Restoration.

(k) Physical Security of the Hotel. Borrower shall provide such
watchmen and take such other measures to protect the physical security
of the Restoration as Lender may from time to time require.

Section 10. No Waiver. No Disbursement shall constitute a waiver of any
condition precedent to the obligation of Lender to make any further
Disbursements or preclude Lender from thereafter declaring the failure of
Borrower to satisfy such condition precedent to be an Event of Default.

Section 11. Conditions Precedent for the Benefit of Lender. All
conditions precedent to the obligation of Lender to make any Disbursement are
imposed hereby solely for the benefit of Lender, and no other party may require
satisfaction of any such condition precedent or be entitled to assume that
Lender will refuse to make any Disbursement in the absence of strict

compliance with such conditions precedent. Any and all Disbursement Conditions
or other requirements or conditions provided herein may be waived by Lender, in
whole or in part, at any time.

Section 12. Definitions. As used in this Schedule 1, the following terms
shall have the meanings indicated:

"Additional Disbursement Conditions" means all of the following: (a)
there shall exist no Event of Default or Default (currently and after giving
effect to the requested disbursement); (b) the representations and warranties
contained in the Modification Agreement and all other Additional Security
Documents (as defined in the Modification Agreement) are true and correct; (c)
Borrower shall have paid Lender's costs and expenses in connection with such
Disbursement (including title charges, and costs and expenses of Lender's
Engineer and its attorneys); (d) no change shall have occurred in the financial
condition of the Borrower or any Guarantor or in the net operating income of the
Hotel, which would have a material adverse effect on the Hotel or on Borrower's
ability to pay the Reimbursement Amount or any other amounts due under the
Reimbursement Agreement or under any of the other L/C Documents as such amounts
become due or on the Borrower's or any Guarantor's ability to perform its
obligations under the L/C Documents as such obligations become due; (e) no
condemnation or adverse zoning or usage change shall have been commenced with
respect to the Hotel, or any portion thereof, and the Borrower shall not have
any knowledge of any Authority taking affirmative steps to condemn, adversely
zone or change the usage of the Hotel, or any portion thereof; (f) the Hotel
shall not

have suffered any damage by fire or other casualty which has not been repaired
or is not being restored in accordance with the terms hereof or, with respect to
any damage other than the Hurricane Damage, in accordance with the terms of the
Reimbursement Agreement, as amended hereby; (g) no law, regulation, ordinance,
moratorium, injunction proceeding, restriction, litigation, action, citation or
similar proceeding or matter shall have been enacted, adopted, or threatened by
any governmental authority, which would have, in Lender's reasonable judgment, a
material adverse effect on the Hotel or Borrower's or any Guarantor's ability to
perform its obligations under the L/C Documents; and (h) no litigation or appeal
therefrom shall be pending with respect to any permits or other approvals issued
in connection with the Restoration and no potential litigation is threatened
that may prevent the timely completion of the Restoration and utilization of the
Hotel.

"Affidavit of Borrower" means a sworn affidavit of Borrower (and such
other parties as Lender may require) to the effect that all statements,
invoices, bills, and other expenses incident to the Restoration incurred to a
specified date, whether or not specified in the Approved Construction Budget,
have been paid in full, except for (a) amounts retained pursuant to the
Construction Manager's Agreement, and (b) items to be paid from the proceeds of
the Disbursement then being requested or in another manner satisfactory to
Lender.

"Approved Construction Budget" means a budget or cost itemization
prepared by Borrower specifying the cost (direct and indirect) by item of all
labor, materials, and services necessary for the Restoration in accordance with
any and all applicable Plans and Specifications and all of the laws, rules and
regulations of all Authorities having jurisdiction over the Hotel and

all other expenses anticipated by Borrower incident to the Restoration. Prior to
any Disbursement hereunder, Lender shall have received and approved the initial
Approved Construction Budget.

"Architect" means an architect or architects as may be engaged by
Borrower from time to time in connection with the Restoration, with the Lender's
prior written approval.

"Architect's Agreement" means that certain agreement or agreements
between Borrower and the Architect(s) with respect to Borrower's retention of
the Architect(s) for the design of any of the Restoration, together with any
amendments thereto approved by Lender.

"Architect's Certificate" means a certificate from the appropriate
Architect in the form of Exhibit "5" annexed hereto.

"Authority" means any governmental and quasi-governmental authorities
(including, federal, state, commonwealth or local government entity and any
board, authority, commission, agency, or department) asserting jurisdiction over
Borrower, the Hotel or the Restoration.

"Construction Manager" means Welbro-E-D Consultants, LLC.

"Construction Manager's Agreement" means that certain construction
management contract between Borrower and the Construction Manager for the
Restoration which shall be submitted by Borrower to Lender for Lender's approval
in the sole and absolute discretion of Lender.

"Cost Savings" means the aggregate amount, if any, by which the amount
actually incurred or, as agreed upon by the Lender and Borrower, anticipated to
be incurred, in a Line Item of the Approved Construction Budget is or will be,
as the case may be, less than the maximum amount established for such Line Item
in the Approved Construction Budget.

"Disbursement" and "Disbursements" shall have the meaning ascribed
thereto in Section 2 hereof.

"Disbursement Conditions" shall have the meaning ascribed thereto in
Section 2 hereof.

"Insurance Adjuster" means McLarens Toplis North America, Inc. or its
designated representative.

"Lender's Engineer" means such engineering or architectural firm from
time to time selected by Lender (including any Affiliate of Lender) to perform
the services of "Lender's Engineer" as set forth herein. The Lender's Engineer
shall be responsible for and approve (i) the Plans and Specifications; (ii) the
Approved Construction Budget, the Project Summaries, the project budget
summaries, construction schedule, project budget reallocation requests and
change orders; and (iii) all Requests for Disbursements, and to complete such
other tasks as Lender may request from time to time, including periodically
inspecting the progress of the Restoration.

"Line Item" means any identified item set forth in the Approved
Construction Budget.

"Major Subcontract" means any Subcontract which provides for payments or
a contract sum in excess of $500,000.

"Major Subcontractor" means any Subcontractor who has executed a Major
Subcontract.

"Material Change" means a change in any document pertaining to the
Restoration, the Approved Construction Budget or the Plans and Specifications,
which: (i) increases or decreases (individually, solely as a result of any
single change) the costs for or related to the Restoration set forth in any Line
Item of the Approved Construction Budget by an amount greater than $10,000, (ii)
increases or decreases (individually, solely as a result of any single change)
the costs for the Restoration set forth in any Line Item of the Approved
Construction Budget by an amount greater than ten percent of such line item,
(iii) increases (cumulatively, as a result of all changes to date which have not
otherwise been previously approved by Lender) the total costs for the
Restoration set forth in the Approved Construction Budget, by an amount greater
than $200,000, (iv) causes a material adverse effect on the Hotel or the ability
of Borrower or any Guarantor to perform any of its obligations under the L/C
Documents, or (v) causes any of the Plans and Specifications to not comply with
all applicable laws and regulations.

"Materialmen" means any supplier of materials for the Restoration
executing a contract with the Construction Manager.

"Plans and Specifications" means all of the architectural, mechanical,
engineering, structural, electrical, grading, paving and landscaping plans and
specifications for the Restoration, as may be developed and approved pursuant to
the provisions of this Amendment.

"Project Budget Reallocation Request" means the Project Budget
Reallocation Request in the form of Exhibit "2" annexed hereto which shall, to
the extent applicable, accompany each Request for Disbursement.

"Project Summary" means the Project Summary in the form of Exhibit "3"
annexed hereto which shall accompany each Request for Disbursement.

"Request for Disbursement" means a written Request for Disbursement in
the form of Exhibit "1" annexed hereto executed by Larry Vitale and Stephen
Harbin and/or any other duly authorized representative(s) of the Borrower
approved by Lender (and such other parties as Lender may request) and approved
by the Insurance Adjuster specifying by name, current address, and amount all
parties to whom Borrower is obligated for labor, materials, or services supplied
for the Restoration and all other expenses incident to the Hotel and the
Restoration, whether or not specified in the Approved Construction Budget,
requesting a Disbursement for the payment of such items, containing, if
requested by Lender, an Affidavit of Borrower, and accompanied by the American
Institute of Architects' Forms G-702 and G-703, Project Summary, Project Budget
Reallocation Request (to the extent applicable), Architect's Certificate (if
applicable) and such schedules, certificates, affidavits, releases, waivers,
statements, invoices, bills, and other documents referred to in the Request for
Disbursement or as Lender may reasonably request.

"Restoration" means the repair and restoration of the Hotel as nearly as
possible to the condition the Hotel was in immediately prior to the Hurricane
Damage, all in accordance with all

applicable Plans and Specifications and otherwise in accordance with the
provisions of the Reimbursement Agreement, as amended by the Amendment
(including, without limitation, the terms, provisions and conditions set forth
in this Schedule 1).

"Subcontractors" means all persons who have entered into a Subcontract
with the Construction Manager or with another Subcontractor; individually, a
"Subcontractor".

"Subcontracts" means the collective reference to all contracts for
demolition, site preparation, construction or any such similar activity in
connection with the Restoration entered into by the Construction Manager and a
Subcontractor and with respect to which Borrower is not a party; individually, a
"Subcontract".

"Substantial Completion" shall be deemed to have occurred when (i) the
Construction Manager shall have delivered and executed a certificate of
substantial completion for the Restoration in the form of AIA Document G704
(April, 1978 edition) or any successor or replacement certificates; (ii) if
applicable, there has been issued a final or, if not yet reasonably obtainable,
a temporary certificate of occupancy for the Restoration; (iii) the Lender shall
have received one set of any and all Plans and Specifications, containing all
changes thereto marked thereon by hand, which shall be acceptable to the Lender;
(iv) Lender shall have received an affidavit of Borrower in form and substance
satisfactory to the Lender certifying and warranting, to the best of Borrower's
knowledge, that the Restoration has been completed in a good and workmanlike
manner substantially in accordance with any and all Plans and Specifications,
and

that all improvements and other appurtenances necessary for the Restoration
and/or the operation of the Hotel have been fully installed, and (v)
Construction Manager shall have executed and delivered to Lender an affidavit
and a final waiver or release of lien in form and substance satisfactory to
Lender and its counsel and complying with all applicable legal requirements.

List of Exhibits:

Exhibit "1" -- Form of Request for Disbursement

Exhibit "2" -- Form of Project Budget Reallocation Request

Exhibit "3" -- Form of Project Summary

Exhibit "4" -- Form of General Contractor's Affidavit

Exhibit "5" -- Form of Architect's Certificate

List of Annexes:

Annex A -- Construction Work

Annex B -- El Con Subcontracts

ANNEX A

Construction Work

1. Water Cooling Tower

2. Curtain Wall at Las Brisas Restaurant

ANNEX B

El Con Subcontracts

None.

SCHEDULE 2

EXCEPTIONS TO REPRESENTATIONS

1. Guarantor will make a loan to the Borrower in the amount of
$3,308,917 in connection with the Amendment, which loan may be repaid as
provided in Section 4(a) and Section 7 of the Amendment.

2. Borrower has made oral arrangements with Grand Bay for the
installation and management of the new spa at the Hotel. The estimated cost of
construction is $4,700,000. The Borrower expects to pay Grand Bay a management
fee of 6% of the gross revenues of the spa and an incentive fee of 25% of the
operating income of the spa. Borrower acknowledges and agrees that any such
arrangements with Grand Bay will need to be memorialized in a written agreement
between the Borrower and Grand Bay which shall be subject to Lender's review and
approval in accordance with the terms of the Reimbursement Agreement and other
L/C Documents.

3. The Borrower plans to enter into an amended and restated management
agreement with Williams Hospitality Group Inc. effective January 1, 1999 as more
fully described in the Borrower's registration statement filed in connection
with the AFICA refinancing. Borrower acknowledges and agrees that any such
agreement shall be subject to Lender's review and approval in accordance with
the terms of the Reimbursement Agreement and other L/C Documents.

4. The Hotel has sustained Hurricane Damage.

<PAGE>

<TABLE>
<CAPTION>
EL CONQUISTADOR
RATIO OF EARNINGS TO FIXED CHARGES ENDING MARCH 31,
----------------------------------------------------------------------------------------
FISCAL FISCAL FISCAL FISCAL FISCAL
1994 1995 1996 1997 1998
EARNINGS AUDITED AUDITED AUDITED AUDITED UNAUDITED
--------
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PRETAX INCOME (LOSS) FROM $(10,047,684) $(27,476,720) $(12,241,033) $(9,403,173) $(7,936,178)
CONTINUING OPERATIONS

CURRENT PERIOD AMORTIZATION OF
INTEREST CAPITALIZED IN PREVOIUS PERIODS $236,328 $ 237,320 $ 237,343 $ 237,343 $ 237,343

INTEREST EXPENSE $ 5,297,771 $16,136,755 $17,021,764 $17,162,132 $ 17,228,735

LESS INTEREST CAPITALIZED DURING PERIOD $ (49,623) $ (1,138) $ 0 $ 0 $ 0

NET AMORTIZATION OF DEBT ISSUANCE $ 742,822 $ 978,007 $ 978,012 $ 978,002 $ 978,007

INTEREST PORTION
OF RENTAL EXPENSE $ 0 $ 0 $ 0 $ 0 $ 0

EARNINGS $(3,820,386) $(10,125,776) $ 5,996,086 $ 8,974,304 $ 10,507,907
------------ ---------- ------------ ---------- -----------

FIXED CHARGES
INTEREST EXPENSE $ 5,297,771 $ 16,136,755 $17,021,764 $17,162,132 $17,228,735

NET AMORTIZATION OF DEBT ISSUANCE $ 742,822 $ 978,007 $ 978,012 $ 978,002 $ 978,007

INTEREST PORTION
OF RENTAL EXPENSE $ 0 $ 0 $ 0 $ 0 $ 0
------------ ------------ ---------- ---------- -----------
TOTAL FIXED CHARGES $ 6,040,593 $ 17,114,762 $17,999,776 $18,140,134 $18,206,742

RATIO OF EARNINGS TO FIXED $(9,860,979) $(27,240,538) $(12,003,690) $(9,165,830) $(7,698,835)
CHARGES(1) ----------- ------------ ------------- ------------ -----------
</TABLE>

(1) Earnings were insufficient to cover fixed charges by the amount set forth.

<PAGE>

<TABLE>
<CAPTION>
EL CONQUISTADOR
RATIO OF EARNINGS TO FIXED CHARGES ENDING DEC 31,
-------------------------------------------------
9 MONTHS 9 MONTHS
DEC 96 DEC 97
EARNINGS UNAUDITED AUDITED
--------
--------------------------------------------------
<S> <C> <C>
PRETAX INCOME (LOSS) FROM $ (14,810,798) $ (15,042,122)
CONTINUING OPERATIONS

CURRENT PERIOD AMORTIZATION OF
INTEREST CAPITALIZED IN PREVOIUS PERIODS $ 178,007 $ 178,007

INTEREST EXPENSE $ 12,691,707 $ 13,156,711

LESS INTEREST CAPITALIZED DURING PERIOD $ 0

NET AMORTIZATION OF DEBT ISSUANCE $ 733,509 $ 733,509

INTEREST PORTION
OF RENTAL EXPENSE $ 0 $ 0

EARNINGS $ (1,207,575) $ (973,895)
--------- ---------

FIXED CHARGES
INTEREST EXPENSE $ 12,691,707 $ 13,156,711

NET AMORTIZATION OF DEBT ISSUANCE $ 733,509 $ 733,502

INTEREST PORTION
OF RENTAL EXPENSE $ 0 $ 0
----------- ----------
TOTAL FIXED CHARGES $ 13,425,216 $ 13,890,213

RATIO OF EARNINGS TO FIXED CHARGES(1) $ (14,632,791) $ (14,864,107)
----------------------------------------
</TABLE>

(1) Earnings were insufficient to cover fixed charges by the amount set forth.

<PAGE>

<TABLE>
<CAPTION>
EL CONQUISTADOR
RATIO OF EARNINGS TO FIXED CHARGES ENDING SEPTEMBER 30,
----------------------------------------------
9 MONTHS 9 MONTHS
SEPTEMBER 97 SEPTEMBER 98
EARNINGS UNAUDITED UNAUDITED
--------
----------------------------------------------
<S> <C> <C>
PRETAX INCOME (LOSS) FROM $(5,080,486) $ (126,000)
CONTINUING OPERATIONS

CURRENT PERIOD AMORTIZATION OF
INTEREST CAPITALIZED IN PREVOIUS PERIODS $ 178,007 $ 178,007

INTEREST EXPENSE $13,231,161 $12,159,106

LESS INTEREST CAPITALIZED DURING PERIOD

NET AMORTIZATION OF DEBT ISSUANCE $ 733,496 $ 795,247

INTEREST PORTION
OF RENTAL EXPENSE $ 0

EARNINGS $ 9,062,176 $13,006,360
---------- ----------

FIXED CHARGES
INTEREST EXPENSE $13,231,161 $12,159,106

NET AMORTIZATION OF DEBT ISSUANCE $ 733,496 $ 795,247

INTEREST PORTION
OF RENTAL EXPENSE $ 0 $ 0
---------- ----------
TOTAL FIXED CHARGES $13,964,657 $12,954,353

RATIO OF EARNINGS TO FIXED CHARGES $(4,902,461)(1) 1.0
--------------- ---
TO 1
------------------------- ---------------------
</TABLE>

(1) Earnings were insufficient to cover fixed charges by the amount set forth.

<PAGE>

EL CONQUISTADOR
RATIO OF EARNINGS TO FIXED CHARGES PROFORMA P/L
-----------------------------------------------------------------
PROFORMA PROFORMA PROFORMA
12 MONTH 9 MONTH 9 MONTH
EARNINGS 1998 FISCAL DEC 1997 SEPTEMBER 98
-------- -----------------------------------------------------------------
<S> <C> <C> <C>
PRETAX INCOME (LOSS) FROM $ 5,398,889 $(5,913,178) $ 9,362,735
CONTINUING OPERATIONS

CURRENT PERIOD AMORTIZATION OF
INTEREST CAPITALIZED IN PREVOIUS PERIODS $ 237,343 $ 178,007 $ 178,007

INTEREST EXPENSE $10,750,176 $ 8,062,632 $ 8,062,632

LESS INTEREST CAPITALIZED DURING PERIOD

NET AMORTIZATION OF DEBT ISSUANCE $ 166,667 $ 125,000 $ 125,000

INTEREST PORTION
OF RENTAL EXPENSE

EARNINGS $16,553,075 $ 2,452,461 $ 17,728,374
----------- --------- ----------

FIXED CHARGES
INTEREST EXPENSE $10,750,176 $ 8,062,632 $ 8,062,632

NET AMORTIZATION OF DEBT ISSUANCE $ 166,667 $ 125,000 $ 125,000

INTEREST PORTION
OF RENTAL EXPENSE $ 0 $ 0 $ 0
---------- --------- ---------
TOTAL FIXED CHARGES $10,916,843 $8,187,632 $ 8,187,632

RATIO OF EARNINGS TO FIXED CHARGES 1.5 $(5,735,171)(1) 2.2
--- ---
TO 1 TO 1
-----------------------------------------------------------

</TABLE>

(1) Earnings were insufficient to cover fixed charges by the amount set forth.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption 'Experts' in the
First Amendment to the Registration Statement on Form S-11 and the related
Preliminary Official Statement and Prospectus for the Offering of the Undivided
Interests in the Loan Agreement between Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority
and El Conquistador Partnership L.P. and to the use of our reports: (a) dated
June 12, 1998 (except for the third, fourth, sixth and seventh paragraphs of
Note 14, as to which the dates are July 13, August 3, September 21, and November
3, 1998, respectively) with respect to the Financial Statements of El
Conquistador Partnership L.P.; (b) dated June 11, 1998 (except for the second,
third, fifth and sixth paragraphs of Note 7, as to which the dates are July 13,
August 3, September 21, and November 3, 1998, respectively) with respect to the
Balance Sheet of WKA El Con Associates; and (c) dated October 2, 1998 (except
for the fourth paragraph of Note 5, as to which the date is November 3, 1998)
with respect to the Balance Sheet of WHG El Con Corp; all of which are included
in the First Amendment to the Registration Statement on Form S-11 and the
related Preliminary Official Statement and Prospectus of El Conquistador
Partnership L.P., to be filed with the Securities and Exchange Commission on or
about December 29, 1998.

ERNST & YOUNG LLP

San Juan, Puerto Rico
December 29, 1998

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

ERNST & YOUNG LLP

Dallas, Texas
December 29, 1998

<PAGE>

EXHIBIT 23.4

CONSENT OF FIDDLER GONZALEZ & RODRIGUEZ

We consent to the reference to our firm under the captions 'Summary -- Tax
Consequences,' 'Tax Consequences' and 'Legal Matters' in the Registration
Statement on Form S-11 (File No. 333-65889) and the related Official Statement
and Prospectus and on the cover page of the Official Statement and Prospectus
for the Offering of Undivided Interests in the Loan Agreement between Puerto
Rico Industrial, Tourist, Educational, Medical and Environmental Control
Facilities Financing Authority and El Conquistador Partnership L.P. and to the
use of our opinion included as Appendix A in such Official Statement and
Prospectus.

FIDDLER GONZALEZ & RODRIGUEZ

San Juan, Puerto Rico
December 29, 1998

<PAGE>

EXHIBIT 23.5

CONSENT OF SHACK & SIEGEL, P.C.

We consent to the reference to our firm under the caption 'Legal Matters'
in the Registration Statement on Form S-11 (File No. 333-65889) and the related
Official Statement and Prospectus for the offering of Undivided Interests in the
Loan Agreement between Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority and El Conquistador
Partnership L.P.

SHACK & SIEGEL, P.C.

New York, New York
December 29, 1998

<PAGE>

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 SEP-30-1998
<PERIOD-START> APR-1-1997 JAN-1-1998
<PERIOD-END> DEC-31-1997 SEP-30-1998
<CASH> 4,608,716 6,660,363
<SECURITIES> 0 0
<RECEIVABLES> 6,197,830 3,445,192
<ALLOWANCES> 346,436 232,320
<INVENTORY> 1,673,266 1,218,803
<CURRENT-ASSETS> 13,953,344 13,202,521
<PP&E> 207,070,810 235,634,122
<DEPRECIATION> 25,944,072 3,341,716
<TOTAL-ASSETS> 200,421,664 254,560,405
<CURRENT-LIABILITIES> 151,661,696 141,351,071
<BONDS> 120,000,000 0
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 200,421,664 254,560,405
<SALES> 0 0
<TOTAL-REVENUES> 60,126,627 79,117,240
<CGS> 0 0
<TOTAL-COSTS> 62,139,878 65,556,898
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 119,000 74,638
<INTEREST-EXPENSE> 13,156,711 12,159,106
<INCOME-PRETAX> (15,042,122) 1,550,613
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (15,042,122) 1,550,613
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 1,676,613
<CHANGES> 0 0
<NET-INCOME> (15,042,122) (126,000)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

<PAGE>