<PAGE>
PROSPECTUS SUPPLEMENT
(To prospectus dated February 8, 1999)
$400,000,000
[LOGO]
8.875% SENIOR SUBORDINATED NOTES DUE 2008
The notes will bear interest at 8.875% per year and will mature on
September 15, 2008. We will pay interest on the notes on March 15 and
September 15 of each year, beginning on March 15, 2001.
We may redeem the notes at any time prior to their maturity at the
redemption prices and on the conditions specified in this prospectus supplement
under "Description of Notes--Optional Redemption."
The notes will be unsecured and will rank equally with our other senior
subordinated indebtedness and junior to all of our senior indebtedness. The
notes will effectively rank junior to all liabilities of our subsidiaries. As of
June 30, 2000, after giving effect to this offering, we would have had
$4.1 billion of senior debt and our subsidiaries would have had $11 million of
debt.
INVESTING IN THE NOTES INVOLVES RISKS WHICH ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT.
---------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Price to public(1)...................................... 100.00% $ 400,000,000
Underwriting discount................................... 1.75% $ 7,000,000
Proceeds to Park Place.................................. 98.25% $ 393,000,000
</TABLE>
(1) Plus accrued interest from September 19, 2000, if settlement occurs
after that date
Neither the Securities and Exchange Commission nor any other federal or
state securities commission or regulatory authority, including any gaming
regulatory authority, has approved or disapproved of these securities or
determined that this prospectus supplement or the accompanying prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about September 19, 2000.
------------------------
LEAD MANAGER
JOINT BOOK RUNNING MANAGER
DEUTSCHE BANC ALEX. BROWN
CO-LEAD MANAGER
JOINT BOOK RUNNING MANAGER
MERRILL LYNCH & CO.
CO-LEAD MANAGER
BANC OF AMERICA SECURITIES
LLC
------------------------
BNY CAPITAL MARKETS, INC.
COMMERZBANK CAPITAL MARKETS CORP.
FIRST UNION SECURITIES, INC.
SCOTIA CAPITAL
SG COWEN
FLEET SECURITIES, INC.
BEAR, STEARNS & CO. INC.
WASSERSTEIN PERELLA
SECURITIES, INC.
------------------------
The date of this prospectus supplement is September 12, 2000.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Market Data................................................. S-3
Summary..................................................... S-4
Risk Factors................................................ S-9
Forward-Looking Statements.................................. S-14
Use of Proceeds............................................. S-15
Capitalization.............................................. S-16
Selected Financial Data..................................... S-17
Regulation and Licensing.................................... S-19
Description of Other Indebtedness........................... S-29
Description of Notes........................................ S-31
Underwriting................................................ S-41
Legal Matters............................................... S-42
PROSPECTUS
About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
Incorporation of Certain Documents By Reference............. 1
Disclosure Regarding Forward-Looking Statements............. 2
The Company................................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Description of Debt Securities.............................. 3
Description of Capital Stock................................ 12
Common Stock................................................ 12
Preferred Stock............................................. 13
Description of Depositary Shares............................ 15
Description of Warrants..................................... 18
Plan of Distribution........................................ 20
Legal Matters............................................... 21
Experts..................................................... 21
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any person to provide you with
different information or to make any representation not contained in this
prospectus supplement or the accompanying prospectus. If anyone provides you
with different or inconsistent information, you should not rely on it. You
should not assume the information contained in this prospectus supplement or the
accompanying prospectus and documents incorporated by reference is accurate
after the dates on the front covers of each of the prospectus supplement and the
accompanying prospectus and after the date of filing of the incorporated
documents. Our business, financial condition, results of operations and
prospects may have changed since those dates.
S-2
<PAGE>
MARKET DATA
Market data used in this prospectus supplement and the accompanying
prospectus, including information relating to our relative position in the
casino and gaming industry, is based on our good faith estimates, which we based
upon our review of internal surveys, independent industry publications and other
publicly available information. Although we believe these sources are reliable,
we have not independently verified the information and cannot guarantee its
accuracy and completeness.
S-3
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND
MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD
READ THIS ENTIRE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS,
INCLUDING THE FINANCIAL DATA AND RELATED NOTES AND THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN AND IN THE ACCOMPANYING PROSPECTUS, BEFORE MAKING AN INVESTMENT
DECISION. THE TERMS "PARK PLACE," "WE," "OUR," AND "US," AS USED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS REFER TO PARK PLACE
ENTERTAINMENT CORPORATION AND ITS SUBSIDIARIES AS A COMBINED ENTITY EXCEPT WHERE
IT IS CLEAR THAT THE TERMS MEAN ONLY PARK PLACE ENTERTAINMENT CORPORATION.
PARK PLACE ENTERTAINMENT CORPORATION
We are the largest gaming company in the world, as measured by casino square
footage and revenues. On December 29, 1999, we acquired all of the outstanding
stock of Caesars World, Inc., a wholly owned subsidiary of Starwood Hotels &
Resorts Worldwide, Inc., and all of Starwood's interests in several other gaming
entities for approximately $3.0 billion in cash. We refer in this prospectus
supplement to all of the interests we acquired collectively as "Caesars." We are
currently the only gaming company with a significant presence in Nevada, New
Jersey and Mississippi, the three largest U.S. gaming markets. We have over
2 million square feet of gaming space and approximately 28,500 hotel rooms. We
operate our properties as a collection of premier brand names that includes
Caesars, Bally's, Flamingo, Grand, Hilton, and Conrad. We believe our casino
hotels are leading establishments with respect to location, size, facilities,
physical condition, quality, and variety of services offered in the areas in
which they are located. We currently own or operate:
- nine casino hotels in Nevada;
- three casino hotels in Atlantic City, New Jersey;
- five dockside casinos in Mississippi;
- an 82 percent owned and managed riverboat casino in Indiana;
- a 49.9 percent owned and managed riverboat casino in New Orleans;
- three partially owned and/or managed casino hotels in Canada;
- two partially owned and managed casino hotels in Australia;
- a partially owned and managed casino hotel in Punta del Este, Uruguay;
- a partially owned and managed casino hotel in Johannesburg, South Africa;
- two casinos on cruise ships; and
- managed slot operations at a racetrack in Delaware.
S-4
<PAGE>
Our properties are listed below.
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
NUMBER OF CASINO SQUARE
NAME AND LOCATION ROOMS/SUITES FOOTAGE(P)
----------------- ------------ -------------
<S> <C> <C>
DOMESTIC CASINOS
NEVADA
Flamingo Las Vegas........................................ 3,626 81,000
Las Vegas Hilton(a)....................................... 2,944 100,000
Paris Las Vegas(b)........................................ 2,916 85,000
Bally's Las Vegas......................................... 2,814 83,000
Caesars Palace............................................ 2,454 125,000
Reno Hilton............................................... 2,003 114,000
Flamingo Laughlin......................................... 1,912 58,000
Flamingo Reno(c).......................................... 604 46,000
Caesars Tahoe(d).......................................... 440 41,000
NEW JERSEY
Bally's Park Place........................................ 1,246 155,000
Caesars Atlantic City..................................... 1,148 120,000
Atlantic City Hilton...................................... 804 60,000
MISSISSIPPI
Grand Casino Tunica....................................... 1,356 140,000
Grand Casino Gulfport..................................... 1,001 110,000
Grand Casino Biloxi....................................... 985 135,000
Bally's Saloon-Gambling Hall-Hotel........................ 235 40,000
Sheraton Casino & Hotel Robinsonville..................... 134 33,000
LOUISIANA
Bally's Casino Lakeshore Resort(e)........................ -- 30,000
INDIANA
Caesars Indiana(f)(g)..................................... -- 90,000
DELAWARE
Dover Downs(h)............................................ -- 25,000
INTERNATIONAL CASINOS
AUSTRALIA
Conrad Jupiters, Gold Coast(i)............................ 609 70,000
Conrad International Treasury Casino, Brisbane(i)......... 136 65,000
URUGUAY
Conrad International Punta del Este Resort and
Casino(j)............................................... 300 38,000
CANADA
Windsor Casino(k)......................................... 389 100,000
Casino Nova Scotia--Sydney(l)............................. -- 16,000
Casino Nova Scotia--Halifax(l)(m)......................... 350 33,000
SOUTH AFRICA
Caesars Gauteng(n)........................................ 80 65,000
CAESARS PALACE AT SEA
S.S. Crystal Harmony(o)................................... -- 3,850
S.S. Crystal Symphony(o).................................. -- 5,000
------ ---------
Total................................................... 28,486 2,066,850
====== =========
</TABLE>
---------
(a) In July 2000, we entered into a definitive agreement to sell the Las Vegas
Hilton. The sale is expected to close by December 31, 2000.
(b) This property opened on September 1, 1999.
S-5
<PAGE>
(c) This property is currently held for sale.
(d) We lease the building that houses the hotel and casino and lease the
underlying land pursuant to a long-term ground and structure lease.
(e) We have a 49.9 percent ownership interest in and manage this property.
(f) We manage Caesars Indiana and own an 82 percent interest in a joint venture
that owns Caesars Indiana.
(g) We started construction on a 500-room hotel tower at Caesars Indiana in
May 2000.
(h) We provide management services to the casino at the Dover Downs racetrack in
Delaware.
(i) We have a 19.9 percent ownership interest in and manage these properties.
(j) We have a 46.4 percent ownership interest in and manage this property.
(k) We have a 50 percent interest in Windsor Casino Limited, which operates the
Casino Windsor. The Province of Ontario owns the complex.
(l) We have a 95 percent interest in Metropolitan Entertainment Group, which
owns and operates these Canadian properties.
(m) The permanent casino was completed and opened in April 2000.
(n) We have an approximate 25 percent interest in a joint venture that owns
Caesars Gauteng and have an approximate 50 percent interest in a joint
venture that manages Caesars Gauteng.
(o) We operate the Caesars Palace at Sea casinos only while the cruise ships on
which they are located are in international waters.
(p) Includes square footage attributable to race and sports books.
Our principal executive offices are located at 3930 Howard Hughes Parkway,
Las Vegas, Nevada 89109, and our telephone number is (702) 699-5000.
S-6
<PAGE>
RECENT DEVELOPMENTS
LAS VEGAS HILTON
In July 2000, we entered into an agreement to sell the Las Vegas Hilton. The
transaction is expected to be completed by December 31, 2000 and is subject to
regulatory approvals. The agreement provides for a purchase price of
$300 million in cash for the property, building, and equipment and approximately
$6 million for estimated net working capital (excluding certain gaming customer
receivables to be retained by us which were approximately $28 million at
June 30, 2000). The purchaser will also assume approximately $31 million in
future liabilities pursuant to an agreement with Hilton Hotels for use of the
Hilton name. In connection with this planned disposition, we recognized a
non-cash impairment loss of $55 million ($36 million net of tax) during the
quarter ended June 30, 2000.
MODIFIED CREDIT FACILITIES
On August 28, 2000, we entered into agreements which modified our existing
bank credit facilities. The existing $1.0 billion 364-day facility, which
expired at the end of August, was eliminated. The availability under this
facility had been permanently reduced to $115 million by the net proceeds from
$400 million of notes issued in November 1999 and $500 million of notes issued
in February 2000. The existing $2.0 billion 364-day facility, which also expired
at the end of August, was renewed for $1.9 billion for an additional 364-day
period. The existing $1.5 billion multi-year facility, which expires
December 31, 2003, was increased to $2.0 billion for the remaining term. At
August 28, 2000, approximately $3.1 billion in aggregate was outstanding under
the modified bank credit facilities.
S-7
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Issuer....................................... Park Place Entertainment Corporation.
Total Amount of Notes Offered................ $400 million in principal amount of 8.875%
senior subordinated notes due 2008.
Maturity..................................... September 15, 2008.
Interest Payment Dates....................... March 15 and September 15, beginning
March 15, 2001. Interest will accrue from
the issue date of the notes.
Optional Redemption.......................... We may redeem the notes at any time at the
redemption prices described in the
"Description of Notes" section under the
heading "Optional Redemption," plus accrued
and unpaid interest to the date of
redemption.
Ranking...................................... The notes are our unsecured obligations. The
notes will rank equally with our other senior
subordinated indebtedness and junior to our
senior indebtedness. The notes will
effectively rank junior to all liabilities of
our subsidiaries. Because the notes are
subordinated, in the event of our bankruptcy,
liquidation or dissolution, holders of notes
will not receive any payment until holders of
senior debt have been paid in full. As of
June 30, 2000, after giving effect to this
offering, we would have had $4.1 billion of
senior debt outstanding.
Certain Covenants............................ The indenture will, among other things, limit
our and our subsidiaries' ability to: enter
into sale and lease-back transactions; incur
liens on our assets to secure debt; merge or
consolidate with another company; and
transfer our assets substantially as an
entirety. These covenants are subject to a
number of important qualifications and
exceptions which are described in the
"Description of Notes" section under the
heading "Additional Covenants of Park Place"
in this prospectus supplement, and in the
"Description of Debt Securities" section
under the heading "Consolidation, Merger or
Sale of Assets" in the accompanying
prospectus.
Use of Proceeds.............................. We estimate that the net proceeds from this
offering will be approximately $393 million.
We will use the net proceeds of the offering
to repay a portion of the outstanding debt
under our $1.9 billion 364-day revolving
credit facility. For additional details, see
"Use of Proceeds."
</TABLE>
S-8
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN ADDITION TO THE OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS AND THE INFORMATION INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS BEFORE MAKING AN INVESTMENT IN THESE
NOTES.
THE RIGHT TO RECEIVE PAYMENTS ON THE NOTES WILL BE JUNIOR TO A SUBSTANTIAL
PORTION OF OUR EXISTING, AND POSSIBLY ALL OF OUR FUTURE, BORROWINGS.
The notes will rank behind all of our existing and future senior debt,
including the debt incurred under our revolving credit facilities. As of
June 30, 2000, after giving effect to this offering and the modifications to our
bank credit facilities in August 2000, we would have had outstanding
approximately $4.1 billion of senior debt, and approximately $1.1 billion
available for borrowing as additional senior debt under our revolving credit
facilities. In addition, our subsidiaries had approximately $11 million of debt.
The indenture governing the notes does not limit our ability to incur
substantial additional senior debt, including under the revolving credit
facilities. If we file for bankruptcy, liquidate or dissolve, our assets would
be available to pay obligations on the notes only after we pay all of our senior
debt. We may not have sufficient assets remaining to make any payments on the
notes. In addition, if we default on our senior debt, we may be prohibited,
under the terms of the notes, from making any payments on the notes. The term
"senior debt," as it applies to the notes, is defined in "Description of
Notes--Certain Definitions."
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES.
We have a significant amount of indebtedness. At June 30, 2000, we had total
consolidated indebtedness of approximately $5.4 billion and stockholders' equity
of approximately $3.8 billion.
The notes will not restrict our ability to borrow substantial additional
funds in the future nor do they provide holders any protection should we be
involved in a highly leveraged transaction. If we add new indebtedness to our
anticipated debt levels following or prior to an acquisition, it could increase
the related risks that we face.
Our substantial indebtedness could have important consequences to you. For
example, it could:
- limit our ability to satisfy our obligations with respect to the notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate activities;
- limit our flexibility in planning for, or reacting to, changes in our
business and industry;
- place us at a competitive disadvantage compared to other less leveraged
competitors; and
- limit our ability to borrow additional funds.
SERVICING OUR INDEBTEDNESS WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH AND OUR
ABILITY TO GENERATE SUFFICIENT CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness, including
the notes, and to fund planned capital expenditures depends on our ability to
generate cash flow in the future. This, to some extent, is subject to general
economic, financial, competitive, legislative and regulatory factors and
S-9
<PAGE>
other factors that are beyond our control. In addition, our ability to borrow
funds under our credit facilities in the future will depend on our meeting the
financial covenants in the agreements, including an interest coverage test and a
leverage ratio test. We cannot assure you that our business will generate cash
flow from operations or that future borrowings will be available to us under our
credit facilities in an amount sufficient to enable us to pay our indebtedness,
including the notes, or to fund our other liquidity needs. As a result, we may
need to refinance all or a portion of our indebtedness, including the notes, on
or before maturity. We cannot assure you that we will be able to refinance any
of our indebtedness on commercially reasonable terms or at all. Our inability to
generate sufficient cash flow or refinance our indebtedness on commercially
reasonable terms would have a material adverse effect on our financial
condition, results of operations and ability to satisfy our obligations under
the notes.
WE ARE A HOLDING COMPANY AND DEPEND ON THE BUSINESS OF OUR SUBSIDIARIES TO
SATISFY OUR OBLIGATIONS UNDER THE NOTES.
We are a holding company. Our subsidiaries conduct substantially all of our
consolidated operations and own substantially all of our consolidated assets.
Consequently, our cash flow and our ability to pay our debts depends upon our
subsidiaries' cash flow and their payment of funds to us. Our subsidiaries are
not obligated to make funds available to us for payment on the notes or
otherwise. In addition, our subsidiaries' ability to make any payments to us
will depend on their earnings, the terms of their indebtedness, business and tax
considerations, legal and regulatory restrictions and economic conditions. These
payments may not be adequate to pay interest and principal on the notes when
due. In addition, their ability to make payments to us depends on applicable law
and debt instruments to which they or we are a party, which may include
requirements to maintain minimum levels of working capital and other assets.
The notes will effectively rank junior to all existing and future
liabilities of our subsidiaries, including trade payables. In the event of a
bankruptcy, liquidation or dissolution of a subsidiary and following payment of
its liabilities, the subsidiary may not have sufficient assets remaining to make
any payments to us so that we can meet our obligations as the holding company,
including our obligations to you under the notes. As of June 30, 2000, our
subsidiaries had approximately $11 million of debt. The indenture governing the
notes will not limit the ability of our subsidiaries to incur substantial
additional debt.
WE MAY REQUIRE YOU TO DISPOSE OF YOUR NOTES OR REDEEM YOUR NOTES IF ANY GAMING
AUTHORITY FINDS YOU UNSUITABLE TO HOLD THEM.
We may require you to dispose of your notes or redeem your notes if any
gaming authority finds you unsuitable to hold them or in order to otherwise
comply with gaming laws to which we are subject, as more fully described in the
sections entitled "Regulation and Licensing" and "Description of
Notes--Compliance with Gaming Laws."
LAKES GAMING, INC. MAY NOT BE ABLE TO SATISFY ITS INDEMNIFICATION OBLIGATIONS TO
GRAND AND THIS COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
In connection with Grand's spin-off of Lakes, Lakes and Grand agreed to
indemnify each other for liabilities retained by them. Among other things, Lakes
agreed to indemnify Grand for:
- liabilities related to Stratosphere Corporation, in which Grand formerly
had an ownership interest, including various lawsuits related to the
bankruptcy of Stratosphere Corporation to which Grand and some of its
current and former directors and officers are parties;
S-10
<PAGE>
- other liabilities relating to the non-Mississippi business of Lakes, such
as tribal loan guarantees and real property lease guarantees; and
- Grand's ongoing indemnification obligations to current and former
directors and officers of Grand with respect to the foregoing.
As security to support Lakes' indemnification obligations to Grand, Lakes
agreed to irrevocably deposit, in trust for the benefit of Grand, as our wholly
owned subsidiary, an aggregate of $30 million, consisting of four annual
installments of $7.5 million, during the four-year period subsequent to
December 31, 1998. The first installment of $7.5 million was paid into the trust
in December 1999. Lakes' ability to satisfy this funding obligation is
materially dependent upon:
- the continued success of its operations;
- any National Indian Gaming Commission review of the Lakes' Indian casino
management contracts, including the assignment of these contracts to Lakes
in the spin-off; and
- the general risks inherent in the Lakes business.
If Lakes fails to fund the trust, or otherwise satisfy its indemnification
obligations to Grand, Grand would be required to satisfy any liabilities, which
could, either individually or in the aggregate, have a material adverse effect
on our business and results of operations.
Lakes will bear the cost of defending itself, its current and former
directors and officers, and Grand and its current and former officers and
directors for any settlement of or judgment in the Stratosphere litigation.
Lakes has been defending itself vigorously and the costs of defense and any
settlement or judgment may have a material adverse effect on Grand if Lakes is
unable to satisfy any of its obligations to Grand. In the Lakes Form 10-Q for
the period ended July 2, 2000, Lakes reported that it had total assets of
$208 million (including cash of $24 million) and total liabilities of
$37 million at July 2, 2000.
For additional information concerning legal proceedings related to
Stratosphere, see our Form 10-K for the year ended December 31, 1999, and our
Form 10-Qs for the quarters ended March 31, 2000 and June 30, 2000, all of which
are incorporated by reference in the accompanying prospectus.
THE GAMING INDUSTRY IS HIGHLY COMPETITIVE.
To the extent that casino hotel room capacity is expanded by others in a
city where our casino hotels are located, competition will increase. The
completion of a number of room expansion projects and the opening of new casino
hotels led to an approximate 10 percent increase in hotel capacity in Las Vegas
in 1999 compared to 1998, thereby increasing competition in all segments of the
Las Vegas market. Including Paris, three new mega-resorts opened in 1999. In
August 2000, a new 2,600-room mega-resort opened next to Paris. Our competitors
have announced other projects in Las Vegas which, if completed, will add
significant casino space and hotel rooms to this market. The new capacity
additions to the Las Vegas market could adversely impact our future operating
results. The business of our Nevada casino hotels might also be adversely
affected if gaming operations of the type conducted in Nevada were to be
permitted under the laws of other states, particularly California.
Similarly, legalization of gaming operations in any jurisdiction located
near Atlantic City, New Jersey, or the establishment of new large-scale gaming
operations on nearby Native American tribal lands, could adversely affect our
Atlantic City casino hotels. In addition, competitors in Atlantic City have
announced plans to develop another hotel casino. The project is still in the
development stage and we cannot predict if or when the project will be
completed.
S-11
<PAGE>
In addition, the supply in the Gulf Coast region increased last year with
the opening of a new resort by a competitor. This increase in supply could have
an adverse effect on our Gulf Coast properties. The expansion in any locale of
riverboat gaming or casino gaming on Indian tribal lands could also impact our
gaming operations. Gaming related referenda have been voted upon or are being
proposed in several states which could materially adversely affect us.
GAMING REFERENDA HAVE BEEN APPROVED IN CALIFORNIA AND ARE BEING PROPOSED IN
MISSISSIPPI AND ADOPTION OF THESE REFERENDA COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR BUSINESS.
Voters in California approved an amendment to the California constitution on
March 7, 2000 that in effect gives Native American tribes in California the
right to offer a limited number of slot machines and a range of house-banked
card games upon signing gaming compacts with the State of California. These
compacts require approval by the federal government. To date, some Native
American tribes have secured state compacts and federal regulatory approval
permitting them to commence casino-style gaming in California on those tribal
lands. At this time, we cannot determine the impact this will have on our Nevada
casinos.
In Mississippi, in three separate instances, referenda were proposed which,
if approved, would have amended the Mississippi constitution to ban gaming in
Mississippi and would have required all currently legal gaming entities to cease
operations within two years of the ban. All three of the proposed referenda have
been ruled illegal by Mississippi state trial court judges. The proponents of
the most recent referendum filed a notice of appeal of the trial court ruling
with the Mississippi Supreme Court, requesting expedited action on the matter.
On September 7, 2000 the Mississippi Supreme Court affirmed the decision of the
trial court with regard to the most recent referendum proposal. Any such
referendum must be approved by the Mississippi Secretary of State and signatures
of at least 91,673 registered voters and at least 18,335 in each Congressional
district must be gathered and certified in order for such a proposal to be
included on a statewide ballot for consideration by the voters. The next
election for which the proponents could attempt to place such a proposal on the
ballot would be in November 2002. It is likely at some point that a revised
initiative will be filed which will adequately address the issues regarding the
effect on government revenues of a prohibition of gaming in Mississippi.
However, while it is too early in the process for us to make any predictions
with respect to whether such a referendum will appear on a ballot or the
likelihood of such a referendum being approved by the voters, if such a
referendum were passed and gaming were prohibited in Mississippi, it would have
a material adverse effect on us and our Mississippi gaming operations.
THE GAMING INDUSTRY IS HIGHLY REGULATED AND WE MUST ADHERE TO VARIOUS
REGULATIONS AND MAINTAIN OUR LICENSES TO CONTINUE OUR OPERATIONS.
The ownership, management and operation of gaming facilities are subject to
extensive federal, state, provincial, tribal and/or local laws, regulations, and
ordinances, which are administered by the relevant regulatory agency or agencies
in each jurisdiction. These laws, regulations and ordinances vary from
jurisdiction to jurisdiction, but generally concern the responsibility,
financial stability and character of the owners and managers of gaming
operations as well as persons financially interested or involved in gaming
operations. For a summary of gaming regulations that affect our business, see
"Regulation and Licensing." The regulatory environment in any particular
jurisdiction may change in the future and any such change could have a material
adverse effect on our results of operations.
S-12
<PAGE>
THE NATIONAL GAMBLING IMPACT STUDY COMMISSION'S RECOMMENDATIONS MAY ADVERSELY
AFFECT THE GAMING INDUSTRY AND OUR OPERATIONS.
A National Gambling Impact Study Commission was established by the United
States Congress to conduct a comprehensive study of the social and economic
impact of gaming in the United States. On April 28, 1999, the National
Commission voted to recommend that the expansion of gambling be curtailed. In
June 1999, the National Commission issued a final report of its findings and
conclusions, together with recommendations for legislative and administrative
actions. Below are highlights of some of those recommendations:
- Legal gaming should be restricted to those at least 21 years of age;
- Betting on college and amateur sports should be banned;
- The introduction of casino-style gambling at pari-mutuel racing facilities
for the primary purpose of saving the pari-mutuel facility financially
should be prohibited;
- Internet gaming should be banned within the United States;
- The types of gaming activities allowed by Indian tribes within a given
state should not be inconsistent with the gaming activities allowed to
other persons in that state; and
- State, local and tribal governments should recognize that casino gaming
provides economic development, particularly for economically depressed
areas. The National Commission differentiated casino gaming from
stand-alone slot machines (e.g., in convenience stores), Internet gaming
and lotteries which the commission stated do not provide the same economic
development.
Any additional regulation of the gaming industry which may result from the
National Commission's report, or otherwise, may have an adverse effect on the
gaming industry, including us.
AN ACTIVE TRADING MARKET MAY NOT DEVELOP FOR THESE NOTES.
Prior to this offering, there was no public market for the notes. We have
been informed by the underwriters that they intend to make a market in the notes
after we complete this offering. However, the underwriters may cease their
market-making activity at any time. In addition, the liquidity of the trading
market in these notes, and the market price quoted for these notes, may be
adversely affected by changes in the overall market for these types of
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, you cannot be
sure that an active trading market will develop for these notes.
S-13
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus and the documents
incorporated by reference in this prospectus supplement and the accompanying
prospectus include forward-looking statements. We intend for the words
"believes," "anticipates," "expects," "intends," "interested in," "plans,"
"continues," "projects" and similar expressions to identify forward-looking
statements. Forward-looking statements include, among other things, statements
relating to our plans, strategies, properties and adequacy of resources under
the heading "Summary" and in our Form 10-K and Form 10-Qs under the headings
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business." We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to risks, uncertainties, and assumptions
about us and our subsidiaries, including, among other things, factors discussed
under the heading "Risk Factors" in this prospectus supplement and in our
filings with the Securities and Exchange Commission and the following:
- the effect of economic, credit and capital market conditions in general
and on gaming companies in particular;
- construction and development issues, including environmental restrictions,
weather, soil conditions, building permits and zoning approvals;
- the impact of competition, particularly from other gaming and hotel/gaming
operations;
- changes in laws or regulations, third party relations and approvals,
decisions of courts, regulators and governmental bodies;
- litigation outcomes and judicial action; and
- changes in customer demand.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus supplement and the accompanying prospectus
and the documents incorporated by reference in this prospectus supplement and
the accompanying prospectus might not occur.
S-14
<PAGE>
USE OF PROCEEDS
We will use the net proceeds of the offering, estimated to be approximately
$393 million, to repay a portion of the outstanding debt under our $1.9 billion
364-day revolving credit facility which matures on August 26, 2001. As of
August 28, 2000, we had approximately $1.1 billion outstanding under our
$1.9 billion credit facility bearing an average interest rate of 7.9%.
S-15
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization at June 30, 2000:
- on a historical basis and
- as adjusted after giving effect to this offering and the application of
the estimated net proceeds of $393 million from this offering as described
under "Use of Proceeds."
You should read this information together with "Use of Proceeds" and the
audited consolidated financial statements and related notes appearing elsewhere
in this prospectus supplement or incorporated by reference in the accompanying
prospectus.
<TABLE>
<CAPTION>
JUNE 30, 2000
----------------------
ACTUAL AS ADJUSTED
-------- -----------
($ IN MILLIONS)
<S> <C> <C>
CASH AND EQUIVALENTS........................................ $ 283 $ 283
====== ======
TOTAL CURRENT PORTION OF LONG-TERM DEBT..................... $ 1 $ 1
====== ======
LONG-TERM DEBT:
Revolving credit facilities(a)............................ $3,150 $2,757
7 3/8% senior notes due 2002(b)........................... 299 299
7% senior notes due 2004(b)............................... 325 325
7.95% senior notes due 2003............................... 299 299
8 1/2% senior notes due 2006.............................. 396 396
7 7/8% senior subordinated notes due 2005................. 400 400
9 3/8% senior subordinated notes due 2007................. 500 500
8 7/8% senior subordinated notes due 2008................. -- 400
Other..................................................... 11 11
Less current portion of long-term debt.................. (1) (1)
------ ------
Total long-term debt, net of current portion............ 5,379 5,386
------ ------
TOTAL STOCKHOLDERS' EQUITY.................................. 3,771 3,771
------ ------
TOTAL CAPITALIZATION........................................ $9,150 $9,157
====== ======
</TABLE>
---------
(a) On August 28, 2000, we entered into agreements which modified our existing
credit facilities. Our current credit facilities consist of a $1.9 billion
364-day facility, which expires August 26, 2001, and a $2.0 billion
multi-year facility which expires December 31, 2003. For additional
information, see "Description of Other Indebtedness."
(b) In connection with our spin-off from Hilton, we assumed the payment
obligations with respect to these outstanding Hilton notes which are net of
unamortized discount.
S-16
<PAGE>
SELECTED FINANCIAL DATA
In the following tables we are providing certain selected financial
information to aid you in your analysis of our company.
We derived the following historical information from our audited financial
statements for 1995 through 1999 and from our unaudited financial statements for
the six months ended June 30, 2000 and 1999. The information is only a summary
and you should read it together with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our historical financial
statements and related notes which are set forth in the reports we have filed
with the Commission and that are incorporated by reference in the accompanying
prospectus.
In the table below under the heading "Pro Forma," we illustrate the
financial results that might have occurred if the Caesars acquisition had been
completed as of January 1, 1999. It is important to understand that this
information is hypothetical, and does not necessarily reflect the financial
performance that would have actually resulted if the acquisition had been
completed on the date assumed. It is also important to understand that this
information does not necessarily reflect our future financial performance.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
OR AS OF JUNE 30, FISCAL YEARS ENDED OR AS OF DECEMBER 31,
------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL
RESULTS OF OPERATIONS(A):
Total revenue...................................... $ 2,479 $1,487 $ 3,176 $2,305 $2,153 $ 970 $ 942
Total operating income............................. 364 220 399 302 201 92 165
Income before cumulative effect of accounting
change........................................... 83(b) 87 138 109 67(c) 36(d) 85
Income before cumulative effect of accounting
change per share-diluted......................... $ .27 $ .28 $ .45 $ .42 $ .25 $ .18 $ .44
OTHER OPERATING DATA(A):
EBITDA(e).......................................... $ 662 $ 372 $ 778 $ 556 $ 512 $ 216 $ 253
Cash flows from operating activities............... 337 249 519 318 375 139 159
Cash flows (used in) investing activities.......... (97) (413) (3,610) (584) (583) (55) (161)
Cash flows from (used in) financing activities..... (303) (60) 3,055 449 175 110 14
Ratio of earnings to fixed charges................. 1.7x 2.6x 2.1x 2.7x 2.4x 2.1x 4.0x
BALANCE SHEET(F):
Cash and equivalents and restricted cash........... $ 283 $ 158 $ 346 $ 382 $ 199 $ 232 $ 38
Total assets....................................... 10,887 7,223 11,151 7,174 5,630 5,364 1,350
Total debt......................................... 5,380 2,493 5,624 2,472 1,306 1,278 549
Total stockholders' equity......................... 3,771 3,686 3,740 3,608 3,381 3,157 592
PRO FORMA
RESULTS OF OPERATIONS:
Total revenue...................................... $2,186 $ 4,604
Total operating income............................. 290 555
Income before cumulative effect of accounting
change........................................... 46 62
Income before cumulative effect of accounting
change per share-diluted......................... $ .15 $ .20
OTHER OPERATING DATA:
EBITDA(d).......................................... $ 539 $ 1,126
</TABLE>
------------
(a) Except for the six months ended June 30, 2000, does not give effect to the
Caesars acquisition, which occurred in December 1999.
(b) Includes after-tax non-recurring net charges totaling $24 million consisting
of an impairment write-down of the Las Vegas Hilton offset by a gain on the
sale of the Flamingo Kansas City Riverboat Casino.
S-17
<PAGE>
(c) Includes after-tax non-recurring charges totaling $59 million related to the
recognition of impairment losses related to a riverboat casino and an
impairment loss and other costs associated with the closure of another
riverboat casino.
(d) Includes after-tax non-recurring charges totaling $23 million, primarily
related to the write-off of pre-opening expenses for a riverboat casino and
losses associated with a planned relocation of another riverboat casino.
(e) EBITDA is earnings before interest, taxes, depreciation, amortization,
pre-opening costs, and other one-time amounts (such as impairment losses,
impact of asset dispositions, and spin-off costs in 1998), which can be
computed by adding depreciation, amortization, pre-opening costs, and other
one-time items to operating income. We have presented EBITDA supplementally
because we believe it provides a more complete analysis of results of
operations. We have excluded one-time items, such as asset write-downs and
impairment losses from EBITDA as these items do not impact operating results
on a recurring basis. Pre-tax one-time charges totaled $37 million for the
six months ended June 30, 2000, relating to an impairment of the Las Vegas
Hilton offset by the pre-tax gain on the sale of the Flamingo Hilton
Riverboat in Kansas City. A $26 million impairment loss on the Flamingo
Hilton Reno was recorded during the year ended December 31, 1999. A total of
$29 million for impairment losses on a riverboat and spin-off costs were
recorded during the year ended December 31, 1998. Impairment losses and
other costs associated with the closure of another riverboat casino totaling
$96 million were recorded during the year ended December 31, 1997. You
should not consider EBITDA as an alternative to any measure of performance
as promulgated under generally accepted accounting principles, such as
operating income or income from continuing operations, nor should you
consider it to be an indicator of our overall financial performance. Our
calculations of EBITDA may be different from the calculations used by other
companies and therefore comparability may be limited. Our historical
depreciation, amortization, pre-opening costs, and other one-time amounts
for the six months ended June 30, 2000 and 1999 and the years ended
December 31, 1999, 1998, 1997, 1996, and 1995 totaled $298 million,
$152 million, $379 million, $254 million, $311 million, $124 million, and
$88 million, respectively. Our pro forma depreciation, amortization,
pre-opening costs, and one-time amounts for the six months ended June 30,
1999 and the year ended December 31, 1999 totaled $249 million, and
$571 million, respectively.
(f) Gives effect to the Caesars acquisition as of December 31, 1999 and
June 30, 2000.
S-18
<PAGE>
REGULATION AND LICENSING
Each of our casinos is subject to extensive regulation under laws, rules and
supervisory procedures primarily in the jurisdiction where located or docked.
Some jurisdictions, however, empower their regulators to investigate
participation by licensees in gaming outside their jurisdiction and require
access to and periodic reports respecting the gaming activities. Violations of
laws in one jurisdiction could result in disciplinary action in other
jurisdictions.
The information set forth below is only a summary of the regulatory
requirements applicable to us. For a more detailed description of the regulatory
requirements applicable to us, including under our Amended and Restated
Certificate of Incorporation, see "Regulation and Licensing" in our Annual
Report on Form 10-K for the year ended December 31, 1999, incorporated by
reference in the accompanying prospectus.
Under provisions of gaming laws in which we have operations and under our
Amended and Restated Certificate of Incorporation, certain of our securities are
subject to restrictions on ownership which may be imposed by specified
governmental authorities. The restrictions may require a holder of our
securities to dispose of the securities or, if the holder refuses to dispose of
the securities, we may be obligated to repurchase the securities.
Each holder of a note, by accepting any note, will be deemed to have agreed
to be bound by the requirements imposed on holders of our debt securities by the
gaming authority of any jurisdiction in which we or any of our subsidiaries
conducts or proposes to conduct gaming activity. See "Description of
Notes--Compliance with Gaming Laws." In addition, the indenture governing the
notes provides that each holder and beneficial owner thereof, by accepting or
otherwise acquiring an interest in any of the notes, will be deemed to have
agreed that if the gaming authority of any jurisdiction in which we or any of
our subsidiaries conducts or proposes to conduct gaming requires that a person
who is a holder or beneficial owner must be licensed, qualified or found
suitable under applicable gaming laws, the holder or beneficial owner will apply
for a license, qualification or finding of suitability within the required time
period. If the person fails to apply or become licensed or qualified or is found
unsuitable, we will have the right, at our option:
(1) to require the person to dispose of its notes or beneficial interest
therein within 30 days of receipt of notice of our election or an earlier
date as may be requested or prescribed by the Gaming Authority; or
(2) to redeem the notes at a redemption price equal to the lesser of:
(A) the person's cost; or
(B) 100% of the principal amount, plus accrued and unpaid interest to the
earlier of the redemption date and the date of the finding of
unsuitability, which may be less than 30 days following the notice of
redemption if so requested or prescribed by the Gaming Authority.
We will notify the trustee under the indenture in writing of any such
redemption as soon as practicable. We will not be responsible for any costs or
expenses any such holder or beneficial owner may incur in connection with its
application for a license, qualification or finding of suitability.
NEVADA GAMING LAWS
The ownership and operation of casino gaming facilities in the State of
Nevada are subject to the Nevada Gaming Control Act and the regulations
promulgated thereunder, and various local ordinances and regulations. Our Nevada
gaming operations are subject to the licensing and regulatory control of the
Nevada Gaming Commission, the Nevada State Gaming Control Board, and, depending
on the facility's location, the Clark County Liquor and Gaming Licensing Board
and the City of Reno. The
S-19
<PAGE>
Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark
County Liquor and Gaming Licensing Board and the City of Reno are collectively
referred to as the "Nevada Gaming Authorities."
Each of our subsidiaries that currently operates a casino in Nevada is
required to be licensed by the Nevada Gaming Authorities. We are required to be
registered by the Nevada Gaming Commission as a publicly traded corporation and
as such, we are required periodically to submit detailed financial and operating
reports to the Nevada Gaming Commission and furnish any other information that
the Nevada Gaming Commission may require.
The Nevada Gaming Commission may, in its discretion, require the holder of
any debt security of a registered publicly traded corporation, such as the
notes, to file applications, be investigated and be found suitable to own the
debt security of such corporation. If the Nevada Gaming Commission determines
that a person is unsuitable to own the security, then pursuant to the Nevada
Gaming Control Act, the registered publicly traded corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Gaming Commission, it:
- pays to the unsuitable person any dividend, interest or any distribution
whatsoever;
- recognizes any voting right by such unsuitable person in connection with
such securities;
- pays the unsuitable person remuneration in any form; or
- makes any payment to the unsuitable person by way of principal,
redemption, conversion, exchange, liquidation or similar transaction.
On December 17, 1998, the Nevada Gaming Commission granted us prior approval
to make public offerings for a period of two years, subject to specified
conditions, which we refer to as the "shelf approval." On October 21, 1999, the
shelf approval was amended in conjunction with the approval of the Caesars
acquisition. The shelf approval also applies to any company we wholly own which
is a publicly traded corporation pursuant to a public offering. The shelf
approval also includes approval for the licensed subsidiaries to guarantee any
security issued by, or to hypothecate their assets to secure the payment or
performance of any obligations evidenced by a security issued by, us or an
affiliate in a public offering under the shelf approval. The shelf approval,
however, may be rescinded for good cause without prior notice upon the issuance
of an interlocutory stop order by the Chairman of the Nevada State Gaming
Control Board. The shelf approval does not constitute a finding, recommendation
or approval of the Nevada Gaming Commission or the Nevada State Gaming Board as
to the accuracy or adequacy of this prospectus supplement or the investment
merits of the securities offered. Any representation to the contrary is
unlawful. The public offering of the notes will be made pursuant to the shelf
approval.
We must obtain prior approval of the Nevada Gaming Commission with respect
to a change in control through merger, consolidation, stock or asset
acquisitions, management or consulting agreements, or any act or conduct by a
person whereby the person obtains control of us. Entities seeking to acquire
control of a registered publicly traded corporation must satisfy the Nevada
State Gaming Control Board and Nevada Gaming Commission in a variety of
stringent standards prior to assuming control of a registered corporation. The
Nevada Gaming Commission may also require controlling stockholders, officers,
directors and other persons having a material relationship or involvement with
the entity proposing to acquire control, to be investigated and licensed as part
of the approval process relating to the transaction.
S-20
<PAGE>
NEW JERSEY GAMING LAWS
The ownership and operations of casino gaming facilities in Atlantic City
are subject to the New Jersey Casino Control Act, regulations of the New Jersey
Casino Control Commission and other applicable laws. No casino may operate
unless it obtains the required permits or licenses and approvals from New Jersey
Commission. The New Jersey Commission is authorized under the New Jersey Act to
adopt regulations covering a broad spectrum of gaming and gaming related
activities and to prescribe the methods and forms of applications from all
classes of licensees. The New Jersey Commission has jurisdiction similar to that
of the Nevada Gaming Commission over the holders and beneficial owners of the
debt and equity securities issued by us and may also require their investigation
and approval.
With respect to debt securities, the New Jersey Commission generally
requires a person holding 15% or more of a debt issue of a publicly traded
affiliate of a casino-licensee to qualify under the New Jersey Act. We cannot
assure you that the New Jersey Commission will continue to apply the 15%
threshold, and the New Jersey Commission could at any time establish a lower
threshold for qualification. The New Jersey Commission may make an exception to
the qualification requirement for institutional investors, in which case the
institutional holder is entitled to a waiver of qualification if the holder's
position in the aggregate is less than 20% of the total outstanding debt of the
affiliate and less than 50% of any outstanding publicly traded issue of the
debt, and if the institutional investor meets certain specified conditions. As
with equity securities, the New Jersey Commission may grant a waiver of
qualification to institutional investors holding larger positions upon a showing
of good cause and if the institutional investor meets certain specified
conditions.
MISSISSIPPI GAMING LAWS
The ownership and operation of casino facilities in Mississippi are subject
to extensive state and local regulation, but primarily the licensing and
regulatory control of the Mississippi Gaming Commission and the Mississippi
State Tax Commission. An owner and operator of casino gaming facilities in
Mississippi and its related holding companies must register under the
Mississippi Gaming Control Act and its gaming, hotel and other operations are
subject to the licensing and regulatory control of the Mississippi Gaming
Commission and various other state and local regulatory agencies. Although not
identical, the Mississippi Gaming Control Act is similar to the Nevada Gaming
Control Act. The Mississippi Gaming Commission has granted us a "shelf offering"
approval that permits us to make this note offering upon notification to the
Commission Staff. The Mississippi Gaming Commission has adopted regulations
which are also similar in many respects to the Nevada gaming regulations,
including the requirement that any person or entity who acquired any security of
an owner and operator of casino gaming facilities may be subject to a
suitability finding.
LOUISIANA GAMING LAWS
The ownership and operation of a riverboat gaming vessel in the State of
Louisiana is subject to the Louisiana Riverboat Economic Development and Gaming
Control Act. The Louisiana Gaming Control Board regulates gaming activities. The
Louisiana Board is responsible for investigating the background of all
applicants seeking a riverboat gaming license, issuing the license and enforcing
the laws, rules and regulations relating to riverboat gaming activities.
The Louisiana Board must find suitable the applicant, its officers,
directors, key personnel, partners and persons holding a 5 percent or greater
interest in the holder of a gaming license. The Louisiana Board may, in its
discretion, also review the suitability of other security holders of, or persons
affiliated with, a licensee. This finding of suitability requires the filing of
an extensive application to the Louisiana Board disclosing personal, financial,
criminal, business and other information. Our Louisiana affiliate, Bally's
Louisiana, Inc., has filed the required forms with the Louisiana regulatory
authorities with respect to a finding of suitability.
S-21
<PAGE>
DELAWARE GAMING LAWS
Video lottery operations in the State of Delaware are regulated by the
Delaware State Lottery Office through the powers delegated to the Director of
the lottery pursuant to Title 29 of the Delaware code. Under Delaware's video
lottery program, video lottery machines are permitted at Delaware's licensed
horse racing tracks.
Any person seeking to contract with the Delaware State Lottery Office for
the provision of goods or services related to video lottery operations,
including management services such as those we provide with respect to video
lottery operation at the Dover Downs race track in Delaware, must be licensed by
the Delaware State Lottery Office as a "technology provider." It is the ongoing
duty of each technology provider licensee to notify the Director of the lottery
of any change in officers, partners, directors, key employees, video lottery
operations employees or owners, collectively the "key individuals." An owner is
a person who owns, directly or indirectly, ten percent or more of an applicant
or licensee. Key individuals are subject to a background investigation, and the
failure of a key individual to satisfy a background investigation may constitute
"cause" for the suspension or revocation of the technology provider's license.
INDIANA GAMING LAWS
Our Indiana casino riverboat operations are subject to the Indiana Riverboat
Gambling Act and the licensing and regulatory control of the Indiana Gaming
Commission, as well as various local, county and state regulatory agencies.
The Indiana Riverboat Act authorizes the issuance of up to 11 riverboat
gaming licenses on waterways located in Indiana. The Indiana Riverboat Act
strictly regulates the facilities, persons, associations and practices related
to gaming operations pursuant to the police powers of the State of Indiana,
including comprehensive law enforcement provisions. The Indiana Riverboat Act
vests the Indiana Gaming Commission with the power and duties of administering,
regulating and enforcing the system of riverboat gaming in the State of Indiana.
The Indiana Gaming Commission's jurisdiction extends to every person,
association, corporation, partnership and trust involved in riverboat gaming
operations in the State of Indiana.
The Indiana Riverboat Act requires the owner of a riverboat gaming operation
to hold an owner's license issued by the Indiana Gaming Commission. Each license
granted entitles the licensee to own and operate one riverboat and gaming
equipment as part of the gaming operation. A licensee may own no more than a 10%
interest in any other owner's license.
The Indiana Riverboat Act restricts the granting of the 11 owner's licenses
by location, with five to be awarded for riverboats operating in specific cities
on Lake Michigan, five to be awarded for riverboats operating on the Ohio River,
and one to be awarded for a riverboat operating on Patoka Lake. The Indiana
Gaming Commission has not considered applicants for the eleventh license since
the Patoka Lake site has been determined by the U.S. Army Corps of Engineers to
be unsuitable for a casino vessel project.
Each owner's license runs for a period of five years. Thereafter, the
license is subject to renewal on an annual basis upon a determination by the
Indiana Gaming Commission that the licensee continues to be eligible for an
owner's license pursuant to the Indiana Riverboat Act and the rules and
regulations adopted thereunder. All riverboat licensees have a continuing duty
to maintain suitability for licensure and are required to notify the Indiana
Gaming Commission of any material change in the information submitted in their
application or any other matter which would render the licensee ineligible. An
owner's license does not create a property right but is a revocable privilege
contingent upon continuing suitability for licensure. A licensed owner undergoes
a complete investigation every three years.
S-22
<PAGE>
The Indiana Gaming Commission may revoke, restrict or suspend an owner's
license at any time that the Indiana Gaming Commission determines the licensee
is in violation of the Indiana Riverboat Act or the rules and regulations of the
Indiana Gaming Commission or if the Indiana Gaming Commission determines
revocation of the license is in the best interest of the State of Indiana and
will protect and enhance the credibility and integrity of riverboat gambling
operations. If the Indiana Gaming Commission determines that a licensee is in
violation of the Indiana Riverboat Act or the rules and regulations promulgated
by the Indiana Gaming Commission, the Indiana Gaming Commission may initiate a
disciplinary proceeding to revoke, restrict or suspend the license or take such
other action, including imposition of civil penalties, that the Indiana Gaming
Commission deems necessary. If for any reason the license is terminated, the
assets of the riverboat gambling operation must be secured and cannot be
disposed of without the approval of the Indiana Gaming Commission and the
licensee remains under the jurisdiction of the Indiana Gaming Commission until
all matters related to the license have been resolved.
A licensed owner may apply for and may hold other licenses that are
necessary for the operation of a riverboat, including licenses to sell alcoholic
beverages, a license to prepare and serve food and any other necessary license.
Furthermore, the Indiana Riverboat Act requires that certain officers, directors
and employees of a gaming operation and suppliers of gaming equipment, devices,
and supplies and certain other suppliers be licensed.
Applicants for licensure must submit comprehensive application and personal
disclosure forms and undergo an exhaustive background investigation prior to the
issuance of a license. The applicant must also disclose the identity of every
shareholder or participant of the applicant and provide specific information
with respect to certain shareholders holding significant interests, 5% or
greater, in the applicant. The Indiana Gaming Commission has the authority to
request specific information on any shareholder.
The Glory of Rome riverboat casino has been licensed to conduct gaming
operations by the Indiana Gaming Commission. An ownership interest in an owner's
riverboat license may only be transferred after receiving approval from the
Indiana Gaming Commission and upon compliance with the regulations issued under
the Indiana Riverboat Act.
A riverboat owner licensee or any other person may not lease, hypothecate,
borrow money against or loan money against an owner's riverboat gaming license.
The Indiana Riverboat Act does not limit the maximum bet or per patron loss.
Minimum and maximum wagers on games are set by the licensee. Wagering may not be
conducted with money or other negotiable currency. No person under the age of 21
is permitted to wager, and wagers may only be taken from a person present on a
licensed riverboat.
Riverboats operating in Indiana must (1) have a valid certificate of
inspection from the U.S. Coast Guard to carry at least 500 passengers; and
(2) be at least 150 feet long. In addition, any riverboat that operates on the
Ohio River must replicate, as nearly as possible, historic Indiana steamboat
passenger vessels of the nineteenth century.
Gaming sessions are generally required to be at least two hours and are
limited to a maximum duration of four hours. No gaming may be conducted while
the boat is docked, except:
- for 30-minute time periods at the beginning and end of each cruise while
the passengers are embarking and disembarking, in which case total gaming
time is limited to four hours, including the pre- and post-docking
periods; and
- when weather or water conditions prevent the boat from cruising.
The Indiana Gaming Commission may grant extended cruise hours in its
discretion. If the master of the riverboat reasonably determines and certifies
in writing that specific weather conditions or water
S-23
<PAGE>
conditions present a danger to the riverboat and the riverboat's passengers and
crew, the riverboat may remain docked and gaming may take place until the master
determines that the conditions have sufficiently diminished for the riverboat to
safely proceed or the duration of the authorized excursion has expired.
After consultation with the U.S. Army Corps of Engineers, the Indiana Gaming
Commission may determine the available navigable waterways that are suitable for
the operation of riverboats under the Indiana Riverboat Act. If the U.S. Army
Corps of Engineers rescinds an approval for the operation of riverboats on a
waterway, a license issued under the Indiana Riverboat Act is void and the
holder may not conduct or continue gaming operations under the Indiana Riverboat
Act. The Indiana Gaming Commission requires employees working on a riverboat to
have a valid merchant marine document from the U.S. Coast Guard.
The Indiana Riverboat Act imposes a 20% wagering tax on adjusted gross
receipts from gaming. The tax imposed is to be paid by the licensed owner to the
Indiana Department of State Revenue before the close of the business day
following the day when the wagers are made. The Indiana Riverboat Act also
requires that licensees pay a $3.00 admission tax for each person admitted to a
gaming excursion. A riverboat license may be suspended for failure to pay such
tax. The Indiana Gaming Commission also has promulgated regulations requiring
riverboat owners to reimburse the Indiana Gaming Commission for the costs of
inspectors and agents required to be present during the conduct of gambling
operations. Further, the Indiana Gaming Commission may impose other fees and
assessments. Riverboats are assessed for property tax purposes as real property
and are taxed at rates determined by local taxing authorities. All Indiana state
excise taxes, use taxes and gross retail taxes apply to sales on a riverboat.
The Indiana Gaming Commission may subject a licensee to fines, suspension or
revocation of its license for any act that is in violation of the Indiana
Riverboat Act, the rules and regulations of the Indiana Gaming Commission, or
for an owner's license if the licensee has not begun regular riverboat
excursions prior to the end of the twelve month period following receipt of a
license from the Indiana Gaming Commission or if the Indiana Gaming Commission
determines that the revocation of the license is in the best interests of the
State of Indiana. A holder of a gaming license is required to post bond with the
Indiana Gaming Commission in an amount that a local community will expend for
infrastructure and other facilities associated with a riverboat operation.
The Indiana Riverboat Act places special emphasis upon minority and women's
business enterprise participation in the riverboat industry. Any person issued a
riverboat owner's license must establish goals of expending at least 10% of the
total dollar value of the licensee's contracts for goods and services with
minority business enterprises and 5% of the total dollar value of the licensee's
contracts for goods and services with women's business enterprises.
An institutional investor which acquires 5% or more of any class of voting
securities of a holding company of a licensee is required to notify the Indiana
Gaming Commission and to provide additional information, and may be subject to a
finding of suitability. A person who acquires 5% or more of any class of voting
securities of a holding company of a licensee is required to apply to the
Indiana Gaming Commission for a finding of suitability. A person, other than an
institutional investor, who acquires a direct or indirect beneficial ownership
interest of 5% or more of any riverboat licensee, through any class of voting
securities of the licensee or a holding company or intermediary company of the
licensee, other than an institutional investor, is required to apply to the
Indiana Gaming Commission for a finding of suitability.
A riverboat owner licensee may not enter into or perform any contract or
transaction in which it transfers or receives consideration which is not
commercially reasonable or which does not reflect the fair market value of the
goods and services rendered or received. All contracts are subject to
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disapproval by the Indiana Gaming Commission. The Indiana Gaming Commission has
a rule requiring the reporting of certain currency transactions, which is
similar to that required by Federal authorities.
A riverboat owner licensee or applicant (or affiliate thereof) may not enter
into a debt transaction of $1.0 million or more, including the issuance of the
notes, without the prior approval of the Indiana Gaming Commission. The Indiana
Gaming Commission rules require that:
- a written request for approval of the debt transaction, along with
relevant information regarding the debt transaction, be submitted to the
Indiana Gaming Commission at least ten days prior to a scheduled meeting
of the Indiana Gaming Commission;
- a representative of the riverboat licensee or applicant be present at the
meeting to answer any questions; and
- a decision regarding the approval of the debt transaction be issued by the
Indiana Gaming Commission at the next following meeting. The Indiana
Gaming Commission rules also authorize the Executive Director of the
Indiana Gaming Commission to waive certain requirements.
The Indiana Gaming Commission has not approved the issuance of the notes.
The Indiana Gaming Commission rules, however, authorize the Executive Director
of the Commission to waive all or part of the approval requirements. Pursuant to
our request, on September 12, 2000, the Executive Director waived the
Commission's approval requirements for the issuance of these notes.
Indiana Gaming Commission regulations also require a licensee or applicant
(or affiliate) to conduct due diligence to ensure that each person with whom the
licensee or applicant (or affiliate) enters into a debt transaction would be
suitable for licensure under the Indiana Riverboat Act.
The Indiana Riverboat Act prohibits contributions to a candidate for a
state, legislative, or local office, or to a candidate's committee or to a
regular party committee by the holder of a riverboat owner's license or a
supplier's license, by an officer of a licensee or by an officer of a person
that holds at least a 1% interest in the licensee. The Indiana Gaming Commission
has promulgated a rule requiring quarterly reporting by the holder of a
riverboat owner's license or a supplier's license of officers of the licensee,
officers of persons that hold at least a 1% interest in the licensee, and of
persons who directly or indirectly own a 1% interest in the licensee.
The Indiana Gaming Commission adopted a rule which prohibits a distribution,
except to allow payment of taxes, by a riverboat licensee to its partners,
shareholders, itself, or any affiliated entity, if the distribution would impair
the financial viability of the riverboat gaming operation. The Indiana Gaming
Commission has adopted a rule which requires riverboat licensees to maintain, on
a quarterly basis, a cash reserve in the amount of the actual payout for three
days, and the cash reserve would include cash in the casino cage, cash in a bank
account in Indiana, or cash equivalents not committed or obligated.
QUEENSLAND GAMING LAWS
Queensland, Australia, like the jurisdictions discussed above, has
comprehensive laws and regulations governing the conduct of casino gaming. All
persons connected with the ownership and operation of a casino, including us,
our subsidiary that manages the Conrad Jupiters, Gold Coast and the Conrad
International Treasury Casino, Brisbane and their principal stockholders,
directors and officers, must be found suitable and/or licensed. The Queensland
authorities have also conducted an investigation of, and have found suitable, us
and our subsidiary BI Gaming Corporation, which holds our Australian gaming
assets.
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URUGUAY GAMING LAWS
Uruguay also has laws and regulations governing the establishment and
operation of casino gaming. The Internal Auditors Bureau of Uruguay, under the
authority of the Executive Power of the Oriental Republic of Uruguay, is
responsible for establishing the terms under which casino operations are
conducted, including suitability requirements of persons associated with gaming
operations, authorized games, specifications for gaming equipment, security,
surveillance and compliance. The Executive Power of the Oriental Republic of
Uruguay has authorized Baluma S.A., a corporation duly organized and existing
under the laws of the Oriental Republic of Uruguay, as owner of the Conrad
International Punta del Este Resort & Casino to conduct casino operations.
ONTARIO, CANADA GAMING LAWS
Our Ontario casino gaming operations are subject to the regulatory control
of the Ontario Alcohol and Gaming Commission pursuant to the Ontario Lottery and
Gaming Corporation Act and certain contractual obligations to the Ontario
Lottery and Gaming Corporation, a provincial crown corporation owned by the
Province of Ontario.
We own 50 percent of Windsor Casino Limited, which operates the casino in
Windsor, Ontario, Canada, on behalf of the Ontario Lottery and Gaming
Corporation, pursuant to an operating agreement with the Ontario Lottery and
Gaming Corporation. The operating agreement imposes certain obligations on
Windsor Casino Limited relating to the operation of the Casino Windsor. Pursuant
to a support agreement between the shareholders of Windsor Casino Limited and
the Ontario Lottery and Gaming Corporation, the shareholders, including us, have
certain obligations relating to the operation of Windsor Casino Limited.
Windsor Casino Limited is required under the Ontario Lottery and Gaming
Corporation Act to be registered as a casino operator with the Ontario Alcohol
and Gaming Commission and must operate in accordance with the terms and
conditions of its registration.
Pursuant to the Ontario Lottery and Gaming Corporation Act and the terms of
Windsor Casino Limited's registration, the Registrar of the Ontario Lottery and
Gaming Corporation must approve any change in the directors or officers of
Windsor Casino Limited. The Ontario Lottery and Gaming Corporation Act also
provides that the Ontario Lottery and Gaming Corporation may require the
submission of disclosures and informational material from any person who has an
interest in Windsor Casino Limited. This includes parent companies and their
directors and officers.
The Registrar of the Ontario Lottery and Gaming Corporation has the power,
subject to the Ontario Lottery and Gaming Corporation Act, to grant, renew,
suspend or revoke registrations. The Registrar is entitled to make such
inquiries and conduct such investigations as are necessary to determine that
applicants for registration meet the requirements of the Ontario Lottery and
Gaming Corporation Act and to require information or material from any person
who has an interest in an applicant for registration. The criteria to be
considered in connection with registration under the Ontario Lottery and Gaming
Corporation Act include the financial responsibility, integrity and honesty of
the applicant and the public interest. The Registrar may, at any time, revoke,
suspend or refuse to renew Windsor Casino Limited's registration for any reason
that would have disentitled it to registration.
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NOVA SCOTIA, CANADA GAMING LAWS
Our Nova Scotia casino gaming operations are subject to the regulatory
control of the Nova Scotia Gaming Control Commission pursuant to the Nova Scotia
Gaming Control Act and certain contractual obligations to the Nova Scotia Gaming
Corporation, a provincial crown corporation owned by the Province of Nova
Scotia.
We own a 95 percent partnership interest in Metropolitan Entertainment
Group, which operates the Sheraton Casino Nova Scotia in Sydney and Halifax on
behalf of the Nova Scotia Gaming Corporation pursuant to an operating contract
with the Nova Scotia Gaming Corporation. The operating contract imposes certain
obligations on Metropolitan relating to the operation of the Sydney and Halifax
casinos. We are also a party to the operating contract as a guarantor of
Metropolitan's obligations.
Metropolitan is required under the Nova Scotia Act to be registered as a
casino operator with the Nova Scotia Commission.
Under the Nova Scotia Act, the director of registration of the Nova Scotia
Commission must be notified, within 15 days, of any change in the officers or
directors of Sheraton Casino Nova Scotia. Sheraton Casino Nova Scotia is also
required to file a disclosure form with the director of registration within
15 days of:
- a person acquiring a beneficial interest in the business of the casino;
- a person exercising control, either directly or indirectly, over the
business of the casino; or
- a person providing financing, either directly or indirectly, to the
business of the casino.
The Nova Scotia Act also provides that the Director of Registration may
require information or material from Metropolitan or any person who has an
interest in the casino. This includes parent companies and their directors and
officers.
The Nova Scotia Commission has the power to suspend or to revoke
Metropolitan's registration, at any time, for any reason that would have
disentitled Metropolitan to obtain the registration. Grounds for suspension or
revocation include the financial responsibility, integrity and honesty of the
casino operator and its officers and directors and the public interest.
SOUTH AFRICA GAMING LAWS
Our South African operations are subject to the Gauteng Gambling and Betting
Act No. 4 of 1995 and the regulations issued thereunder. If an entity has
directly or indirectly procured a controlling or financial interest of
1 percent or more in a casino license holder in Gauteng, then the acquiring
entity will have to apply for the consent of the Gauteng Gambling Board for the
holding of such an interest. The acquiring entity must apply to the Gauteng
Gambling Board for consent to hold such an interest within 14 days after the
transaction closes and the interest is procured.
The application for the consent of the Gauteng Gambling Board must be made
within a period and in a manner prescribed by the Gauteng Gambling Board. To
this end, the Gauteng Gambling Board has issued a standard application form. In
making such an application, all the relevant provisions of the Gauteng Gambling
and Betting Act relating to an application for a casino license apply. These
include:
- the application itself;
- representations by interested persons;
- response by the applicant to such representations;
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- further information and oral representations;
- public inspection of the application and representations;
- obtaining of a police report;
- the holding of a hearing in respect of the application which is open to
members of the public and where witnesses are called; and
- a decision being given on the application and conditions being applied in
the event of the application being granted.
The Gauteng Gambling Board may recover from the applicant all reasonable
expenses incurred by the Gauteng Gambling Board in conducting the necessary
investigation in respect of the application. Where consent is not granted, the
acquiring entity shall, within the prescribed period and in the manner
prescribed or determined by the Gauteng Gambling Board, dispose of the interest
in question. In addition, Regulation 88(1) provides that the casino license
holder must notify the Gauteng Gambling Board of the acquiring entity's identity
and address as soon as practicable after it becomes aware of the procurement of
an interest in it.
IRS REGULATIONS
The Internal Revenue Service requires operators of casinos located in the
United States to file information returns for U.S. citizens, including names and
addresses of winners, for keno and slot machine winnings in excess of stipulated
amounts. The IRS also requires operators to withhold taxes on some keno, bingo
and slot machine winnings of nonresident aliens. We are unable to predict the
extent, to which these requirements, if extended, might impede or otherwise
adversely affect operations of, and/or income from, the other games.
Regulations adopted by the Financial Crimes Enforcement Network of the
Treasury Department and the gaming regulatory authorities in some of the
domestic jurisdictions in which we operate casinos, or in which we have applied
for licensing to operate a casino, require the reporting of currency
transactions in excess of $10,000 occurring within a gaming day, including
identification of the patron by name and social security number. This reporting
obligation began in May 1985 and may have resulted in the loss of gaming
revenues to jurisdictions outside the United States which are exempt from the
ambit of these regulations.
OTHER LAWS AND REGULATIONS
Each of the casino hotels and riverboat casinos described in this prospectus
supplement is subject to extensive state and local regulations and, on a
periodic basis, must obtain various licenses and permits, including those
required to sell alcoholic beverages. We believe that we have obtained all
required licenses and permits and our businesses are conducted in substantial
compliance with applicable laws.
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DESCRIPTION OF OTHER INDEBTEDNESS
The following is a brief summary of important terms of our material
indebtedness:
REVOLVING CREDIT FACILITIES. In December 1998, we entered into two
revolving credit facilities with a syndicate of financial institutions. The
revolving credit facilities provided for borrowings of up to $2.15 billion,
consisting of:
- a 364-day senior unsecured revolving credit facility of up to
$650 million; and
- a five-year senior unsecured revolving credit facility of up to
$1.5 billion.
In connection with the Caesars acquisition, on August 31, 1999 we entered
into a new $2.0 billion revolving credit facility which replaced the
$650 million 364-day revolving credit facility. In addition to the new
$2.0 billion 364-day revolving credit facility, we also entered into a
$1.0 billion 364-day revolving credit facility which could only be drawn to
provide funding for the Caesars acquisition. Availability under the
$1.0 billion revolving credit facility was reduced by the proceeds of any notes
we issued. The amount outstanding under the $1.0 billion 364-day revolving
credit facility was reduced to approximately $606 million following the issuance
of the $400 million senior notes issued in November 1999 and was further reduced
to approximately $115 million upon the issuance of the $500 million senior
subordinated notes in February 2000.
At December 31, 1999, an aggregate of approximately $3.9 billion was
outstanding under our revolving credit facilities, leaving approximately
$213 million available to us at that date.
On August 28, 2000, we entered into agreements which modified our existing
bank credit facilities. The existing $1.0 billion 364-day facility, which
expired at the end of August, was eliminated. The existing $2.0 billion 364-day
facility, which also expired at the end of August, was renewed for $1.9 billion
for an additional 364-day period. The existing $1.5 billion multi-year facility,
which expires December 31, 2003, was increased to $2.0 billion for the remaining
term. At August 28, 2000, approximately $3.1 billion in aggregate principal
amount was outstanding under the modified bank credit facilities.
HILTON DEBT. Concurrently with our spin-off from Hilton, we assumed primary
liability for $625 million of Hilton's fixed rate debt. The payment terms of
this debt assumption mirror the terms of Hilton's existing $300 million 7 3/8%
notes due 2002 and its $325 million 7% notes due 2004. We entered into
supplemental indentures with the trustee under these notes providing for our
assumption of the payment obligations under the existing indentures.
7 7/8% SENIOR SUBORDINATED NOTES DUE 2005. In December 1998, we issued
$400 million of 7 7/8% senior subordinated notes due December 2005 in a private
placement offering. The 7 7/8% notes are redeemable at any time prior to their
maturity at the redemption prices described in the indenture governing the
7 7/8% notes. The 7 7/8% notes are unsecured senior subordinated obligations and
are subordinated to all of our senior debt.
7.95% SENIOR NOTES DUE 2003. In August 1999, we issued $300 million
aggregate principal amount of 7.95% senior notes due 2003 in a private placement
offering. The 7.95% notes are redeemable at any time prior to their maturity at
the redemption prices described in the indenture governing the 7.95% notes. The
7.95% notes are unsecured senior obligations and rank equally with all of our
senior unsecured debt.
8 1/2% SENIOR NOTES DUE 2006. In November 1999, we issued $400 million
aggregate principal amount of 8 1/2% senior notes due 2006 in a registered note
offering. The 8 1/2% notes are redeemable at any time prior to their maturity at
the redemption prices described in the indenture governing the 8 1/2% notes. The
8 1/2% notes are unsecured senior obligations and rank equally with all of our
senior unsecured debt.
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9 3/8% SENIOR SUBORDINATED NOTES DUE 2007. In February 2000, we issued
$500 million aggregate principal amount of 9 3/8% senior subordinated notes due
2007 in a private placement offering. The 9 3/8% notes are redeemable at any
time prior to their maturity at the redemption prices described in the indenture
governing the 9 3/8% notes. The 9 3/8% notes are unsecured senior subordinated
obligations and are subordinated to all of our senior debt.
COMMERCIAL PAPER PROGRAM. We have established a $1 billion commercial paper
program. To the extent that we incur debt under this program, we must maintain
an equivalent amount of credit available under our revolving credit facility. We
have borrowed under the program for various periods during 1999. At
September 30, 2000, we had no outstanding borrowings under the commercial paper
program.
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DESCRIPTION OF NOTES
The notes offered by this prospectus supplement and the accompanying
prospectus constitute a series of debt securities, which are described more
fully in the accompanying prospectus, to be issued pursuant to an indenture
between Park Place and Wells Fargo Bank, Minnesota NA (formerly Norwest of
Minneapolis), as trustee. The following description of the particular terms of
the notes offered hereby supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the debt
securities set forth in the accompanying prospectus. Capitalized terms used and
not otherwise defined in the following discussion are defined below under
"Certain Definitions."
The following description is a summary of selected portions of the
indenture. It does not restate the indenture in its entirety. We urge you to
read the indenture because it, and not this description, defines your rights as
holders of these notes. In this description, the words "Park Place" refer only
to Park Place Entertainment Corporation and not to any of its subsidiaries.
RANKING
The notes:
- are unsecured general obligations of Park Place;
- are subordinated in right of payment to all existing and future Senior
Debt of Park Place;
- are equal in right of payment with all existing and future senior
subordinated Debt of Park Place; and
- are senior in right of payment to any future subordinated Debt of Park
Place.
The notes will effectively rank junior to Senior Debt of Park Place and to
all liabilities of Park Place's subsidiaries, including trade payables.
As of June 30, 2000, after giving effect to this offering, Park Place would
have had $4.1 billion of Senior Debt outstanding. Park Place's subsidiaries had
approximately $11 million of indebtedness outstanding at June 30, 2000. The
indenture will permit Park Place and its subsidiaries to incur additional Debt,
including the incurrence of additional Senior Debt by Park Place.
PRINCIPAL, MATURITY AND INTEREST
The notes will be limited to $400 million aggregate principal amount. The
notes will mature on September 15, 2008. Park Place will issue the notes in
denominations of $1,000 and integral multiples of $1,000.
Interest on the notes will accrue at the rate of 8.875% per annum. Interest
will be payable semi-annually in arrears on September 15 and March 15, beginning
on March 15, 2001. Park Place will make each interest payment to the holders of
record of the notes on the immediately preceding September 1 and March 1.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
OPTIONAL REDEMPTION
Upon not less than 30 nor more than 60 days' notice, Park Place may redeem
the notes in whole but not in part at any time at a redemption price equal to
100% of the principal amount thereof plus
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the Make-Whole Premium, together with accrued and unpaid interest thereon, if
any, to the applicable redemption date.
SELECTION AND NOTICE
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder of notes to be
redeemed at its registered address.
Notes called for redemption become due on the date fixed for redemption. On
and after the redemption date, interest ceases to accrue on notes called for
redemption.
MANDATORY REDEMPTION
Park Place will not be required to make any mandatory sinking fund payments
in respect of the notes.
SUBORDINATION
The payment of principal, premium and interest, if any, on the notes will be
subordinated to the prior payment in full of all Senior Debt of Park Place.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy, insolvency or similar proceeding at the rate
specified in the applicable Senior Debt, whether or not such interest is an
allowed claim in any such proceeding) before the holders of the notes will be
entitled to receive any payment with respect to the notes (except that holders
of the notes may receive payments made from the trust described under
"Description of Debt Securities--Defeasance of Certain Covenants" in the
accompanying prospectus), in the event of any distribution to creditors of Park
Place:
(1) in a liquidation or dissolution of Park Place;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Park Place or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshalling of Park Place's assets and liabilities.
Park Place also may not make any payment in respect of the notes, except
from the trust described under "Description of Debt Securities--Defeasance of
Certain Covenants " in the accompanying prospectus, if:
(1) a payment default on Designated Senior Debt occurs and is continuing
beyond any applicable grace period; or
(2) any other default occurs and is continuing on Designated Senior Debt
that permits holders of the Designated Senior Debt to accelerate its
maturity and the trustee receives a notice of such default (a "Payment
Blockage Notice") from Park Place or the holders of any Designated Senior
Debt.
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Debt has been accelerated.
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No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 180 days.
Park Place must promptly notify holders of Senior Debt if payment of the
notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of Park Place, holders of the notes
may recover less ratably than creditors of Park Place who are holders of Senior
Debt. See "Risk Factors--The right to receive payments on the notes will be
junior to a substantial portion of our existing, and possibly all of our future,
borrowings."
If Park Place fails to make any payment on the notes when due or within any
applicable grace period, whether or not on account of the subordination
provisions referred to above, such failure would constitute an Event of Default
under the indenture and would enable the holders of the notes to accelerate the
maturity thereof. See "--Events of Default."
ADDITIONAL COVENANTS OF PARK PLACE
The covenant provisions of the indenture described under the caption
"Description of Debt Securities" in the accompanying prospectus will apply to
the notes. In addition to the foregoing, the following covenants of Park Place
will apply to the notes for the benefit of the holders of the notes:
LIMITATION ON LIENS. Other than as set forth below under "--Exempted Liens
and Sale and Lease-Back Transactions," neither Park Place nor any of its
Subsidiaries may create, assume or suffer to exist any Lien:
(1) upon any Principal Property;
(2) upon any shares of capital stock of any Restricted Subsidiary owned by
Park Place or any Restricted Subsidiary; or
(3) securing Debt of any Restricted Subsidiary,
without equally and ratably securing the notes with, or prior to, the Debt
secured by such Lien, for so long as such Debt shall be so secured,
PROVIDED, HOWEVER, that this limitation will not apply to:
(a) Liens existing on the date of issuance of the notes;
(b) Liens existing:
- on property at the time of acquisition through a merger, a
consolidation or otherwise by Park Place or a Restricted
Subsidiary; or
- on property or securing Debt of, or Capital Stock of any
corporation, partnership or other entity at the time such
corporation, partnership or other entity becomes a Restricted
Subsidiary;
(c) Liens to secure Debt with respect to all or any part of the
acquisition cost or the cost of construction or improvement of property,
provided, such Debt is incurred and related Liens are created within
24 months of the acquisition, completion of construction or improvement or
commencement of full operation, whichever is later, and such Debt does not
exceed the aggregate amount of the acquisition cost and/or the construction
cost thereof;
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(d) Liens on shares of capital stock or property of a Restricted
Subsidiary to secure Debt with respect to all or part of the acquisition
cost of such Restricted Subsidiary, provided that such Debt is incurred and
related Liens are created within 24 months of the acquisition of such
Restricted Subsidiary and such Debt does not exceed the acquisition cost of
such Restricted Subsidiary;
(e) Liens to secure Debt incurred to construct additions to, or to make
Capital Improvements to, properties of Park Place or any Restricted
Subsidiary, provided such Debt is incurred and related Liens are created
within 24 months of completion of construction or Capital Improvements and
such indebtedness does not exceed the cost of such construction or Capital
Improvements;
(f) Liens in favor of Park Place or another Restricted Subsidiary;
(g) Liens to secure Debt on which interest payments are exempt from
Federal income tax under Section 103 of the Internal Revenue Code of 1986,
as amended;
(h) Liens on the equity interest of Park Place or any Restricted
Subsidiary in any Joint Venture or any Restricted Subsidiary which owns an
equity interest in such Joint Venture to secure Debt, provided the amount of
such Debt is contributed and/or advanced solely to such Joint Venture;
(i) Liens securing Senior Debt and Liens on assets of a Subsidiary
securing Debt of that Subsidiary;
(j) any extension, renewal or replacement, in whole or in part, of any
Liens referred to in the foregoing clauses (a) through (i) or of any Debt
secured thereby, including premium, if any, provided that the aggregate
principal amount secured does not exceed:
- the greater of (1) the principal amount secured thereby at the time
of such extension, renewal or replacement, or, as the case may be,
repayment or extinguishment, and (2) 80% of the fair market value
(in the opinion of the Park Place board of directors) of the
properties subject to such extension, renewal or replacement, plus
- any reasonable fees and expenses associated with such extension,
renewal or replacement,
and provided, further, that in the case of a replacement thereof, such Debt
is incurred and related Liens are created within 24 months of the repayment
or extinguishment of the Debt or Liens referred to in the foregoing clauses
(a) through (i);
(k) purchase money liens on personal property;
(l) Liens to secure payment of workers' compensation or insurance
premiums, or relating to tenders, bids or contracts (except contracts for
the payment of money);
(m) Liens in connection with tax assessments or other governmental
charges, or as security required by law or governmental regulation as a
condition to the transaction of any business or the exercise of any
privilege or right;
(n) mechanic's, materialman's, carrier's or other like Liens, arising in
the ordinary course of business; and
(o) Liens in favor of any domestic or foreign government or governmental
body in connection with contractual or statutory obligations.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. Other than as provided
below under "--Exempted Liens and Sale and Lease-Back Transactions," neither
Park Place nor any Restricted Subsidiary will enter into any arrangement with
any lessor (other than Park Place or a Restricted
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Subsidiary), providing for the lease to Park Place or a Restricted Subsidiary
for a period of more than three years (including renewals at the option of the
lessee) of any Principal Property that has been or is to be sold or transferred
by Park Place or such Restricted Subsidiary to such lessor or to any other
Person, and for which funds have been or are to be advanced by such lessor or
other Person on the security of the leased property ("Sale and Lease-Back
Transaction"), unless either:
(a) Park Place or such Restricted Subsidiary would be entitled, pursuant
to the provisions described in clauses (a) through (o) under "--Limitation
on Liens" above, to create, assume or suffer to exist a Lien on the property
to be leased without equally and ratably securing the notes; or
(b) an amount equal to:
- the greater of the net cash proceeds of such sale or the fair
market value of such property (in the opinion of Park Place's board
of directors), less
- the fair market value (in the opinion of Park Place's board of
directors) of any noncash proceeds of the sale of such property
(provided such noncash proceeds constitute "Principal Property,"
acquired on the date the property sold in the Sale and Lease-Back
Transaction was acquired by Park Place or any of its Restricted
Subsidiaries),
is applied within 180 days to the retirement or other discharge of the notes
or Debt ranking on a parity with the notes.
EXEMPTED LIENS AND SALE AND LEASE-BACK TRANSACTIONS. Notwithstanding the
restrictions set forth in "--Limitation on Liens" and "--Limitation on Sale and
Lease-Back Transactions" above, Park Place or any Restricted Subsidiary may
create, assume or suffer to exist Liens or enter into Sale and Lease-Back
Transactions not otherwise permitted as described above, provided that at the
time of such event, and after giving effect thereto, the sum of outstanding Debt
secured by such Liens (not including Liens permitted under "--Limitation on
Liens" above) plus all Attributable Debt in respect of such Sale and Lease-Back
Transactions entered into (not including Sale and Lease-Back Transactions
permitted under "--Limitation on Sale and Lease-Back Transactions"), measured,
in each case, at the time any such Lien is incurred or any such Sale and
Lease-Back Transaction is entered into, by Park Place and Restricted
Subsidiaries does not exceed 15% of Consolidated Net Tangible Assets.
REPORTS
Whether or not required by the Commission, so long as any notes are
outstanding, Park Place will file with the applicable trustee such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934, as amended, in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in such
rules and regulations.
COMPLIANCE WITH GAMING LAWS
Each holder of a note, by accepting any note, shall be deemed to have agreed
to be bound by the requirements imposed on holders of debt securities of Park
Place by the gaming authority of any jurisdiction of which Park Place or any of
its Subsidiaries conducts or proposes to conduct gaming activities. For a
description of the regulatory requirements applicable to Park Place, see
"Regulation and Licensing" herein, "Description of Debt Securities--Mandatory
Disposition Pursuant to Gaming Laws" in the accompanying prospectus and
"Regulation and Licensing" in our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, which is incorporated by reference in the accompanying
prospectus.
S-35
<PAGE>
EVENTS OF DEFAULT
The following additional remedy will apply to the notes: In the case of an
Event of Default arising from certain events of bankruptcy or insolvency of Park
Place, all outstanding notes will become due and payable immediately without
further action or notice by the holders of notes or the trustee.
In addition, the following event of default replaces the fifth Event of
Default identified in the accompanying prospectus under "Description of Debt
Securities--Events of Default" with respect to the notes: the acceleration of
the maturity of indebtedness of Park Place (other than Non-recourse
Indebtedness), at any one time, in an aggregate amount in excess of the greater
of (i) $25 million and (ii) 5% of Consolidated Net Tangible Assets, if such
acceleration is not annulled within 30 days after written notice to Park Place
by the trustee and the holders of at least 25% in principal amount of the
outstanding notes.
CERTAIN DEFINITIONS
"Attributable Debt" with respect to any Sale and Lease-Back Transaction that
is subject to the restrictions described under "--Limitation on Sale and
Lease-Back Transactions" means the present value of the minimum rental payments
called for during the term of the lease (including any period for which such
lease has been extended), determined in accordance with generally accepted
accounting principles, discounted at a rate that, at the inception of the lease,
the lessee would have incurred to borrow over a similar term the funds necessary
to purchase the leased assets.
"Capital Improvements" means additions to properties or renovations or
refurbishing of properties which are designed to substantially upgrade such
properties or significantly modernize the operation thereof.
"Capital Stock" means with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Consolidated Net Tangible Assets" means the total amount of assets
(including investments in Joint Ventures) of Park Place and its Subsidiaries
(less applicable depreciation, amortization and other valuation reserves) after
deducting therefrom (a) all current liabilities of Park Place and its
Subsidiaries (excluding (i) the current portion of long-term indebtedness, (ii)
intercompany liabilities and (iii) any liabilities which are by their terms
renewable or extendible at the option of the obligor thereon to a time more than
12 months from the time as of which the amount thereof is being computed) and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and any other like intangibles, all as set forth on the most recent consolidated
balance sheet of Park Place and computed in accordance with generally accepted
accounting principles.
"Credit Facilities" means, with respect to Park Place, one or more debt
facilities or commercial paper facilities, in each case with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Debt" means notes, bonds, debentures or other similar evidences of Debt for
borrowed money or any guarantee of any of the foregoing.
"Default" means any event that after notice or lapse of time, or both, would
become an Event of Default.
S-36
<PAGE>
"Designated Senior Debt" means any Senior Debt permitted under the Indenture
the principal amount of which is $100.0 million or more and that has been
designated by Plark Place as "Designated Senior Debt."
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Joint Venture" means any partnership, corporation or other entity, in which
up to and including 50% of the partnership interests, outstanding voting stock
or other equity interest is owned, directly or indirectly, by Park Place and/or
one or more Subsidiaries.
"Lien" means any mortgage, pledge, lien, encumbrance or other security
interest to secure payment of Debt.
"Make-Whole Premium" means, with respect to any note at any redemption date,
the excess, if any, of (a) the present value of the sum of the principal amount
and premium, if any, that would be payable on such note on its maturity date and
all remaining interest payments (not including any portion of such payments of
interest accrued as of the redemption date) to and including such maturity date,
discounted on a semi-annual bond equivalent basis from such maturity date to the
redemption date at a per annum interest rate equal to the sum of the Treasury
Yield (determined on the Business Day immediately preceding the date of such
redemption), plus 50 basis points, over (b) the principal amount of the note
being redeemed.
"Non-recourse Indebtedness" means indebtedness the terms of which provide
that the lender's claim for repayment of such indebtedness is limited solely to
a claim against the property which secures such indebtedness.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Debt.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, estate,
unincorporated organization or government or any agency or political subdivision
thereof or any other entity.
"Principal Property" means any real estate or other physical facility or
depreciable asset, the net book value of which on the date of determination
exceeds the greater of $25 million or 2% of Consolidated Net Tangible Assets of
Park Place.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is or upon the happening of an
event or passage of time would be, required to be redeemed prior to the stated
maturity of the notes or is redeemable at the option of the holder thereof at
any time prior to the stated maturity of the notes, or is convertible into or
exchangeable for debt securities at any time prior to the stated maturity of the
notes.
S-37
<PAGE>
"Restricted Subsidiary" means any Subsidiary of Park Place organized and
existing under the laws of the United States of America and the principal
business of which is carried on within the United States of America (x) which
owns, or is a lessee pursuant to a capital lease of, any Principal Property or
(y) in which the investment of Park Place and all its Subsidiaries exceeds 5% of
Consolidated Net Tangible Assets as of the date of such determination other
than, in the case of either clause (x) or (y), (i) each Subsidiary whose
business primarily consists of finance, banking, credit, leasing, insurance,
financial services or other similar operations, or any combination thereof, and
(ii) each Subsidiary formed or acquired after the date hereof for the purpose of
developing new assets or acquiring the business or assets of another Person and
which does not acquire any part of the business or assets of Park Place or any
Restricted Subsidiary.
"Senior Debt" means:
(1) all Debt outstanding under Credit Facilities and all Hedging Obligations
with respect thereto;
(2) any other Debt, unless the instrument under which such Debt is incurred
expressly provides that it is on a parity with or subordinated in right
of payment to the notes or to other Debt which ranks equally with, or is
subordinated to, the notes; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or owing by
Park Place.
(2) any Indebtedness of Park Place to any of its Subsidiaries or other
Affiliates; or
(3) any trade payables.
"Significant Subsidiary" of Park Place means any Restricted Subsidiary of
Park Place that is a "significant subsidiary" as defined in Rule 1.02(v) of
Regulation S-X under the Securities Act.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation is, at the time, directly or
indirectly, owned by Park Place or by one or more Subsidiaries thereof, or by
Park Place and one or more Subsidiaries.
"Treasury Securities" mean any investment in obligations issued or
guaranteed by the United States government or any agency thereof.
"Treasury Yield" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled by and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the date
fixed for redemption (or, if such Statistical Release is no longer published,
any publicly available source of similar data)) most nearly equal to the then
remaining average life of the notes, provided that if the average life of the
notes is not equal to the constant maturity of a United States Treasury security
for which a weekly average yield is given, the Treasury yield shall be obtained
by linear interpolation (calculated to the nearest one-twelfth of a year) from
the weekly average yields of United States Treasury securities for which such
yields are given, except that if the average life of the notes is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"wholly owned" with respect to any Subsidiary, means any Subsidiary of any
Person of which at least 99% of the outstanding Capital Stock is owned by such
Person or another wholly-owned Subsidiary of such Person. For purposes of this
definition, any directors' qualifying shares or investments by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary.
S-38
<PAGE>
BOOK-ENTRY SYSTEM, FORM AND DELIVERY
The notes will be represented by one or more global securities registered in
the name of Cede & Co., the nominee of the Depository Trust Company, as
"Depositary," and the provisions set forth under "Description of Debt
Securities--Denominations, Registration, Transfer and Exchange" in the
accompanying prospectus will apply to the notes.
The Depositary is a limited-purpose trust company organized under New York
banking law, a "banking organization" within the meaning of New York banking
law, a member of the United States 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
Exchange Act. The Depositary holds securities that its participants deposit with
the Depositary. The Depositary also facilitates the settlement among its
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its 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 Depositary's
system is also available to indirect participants in the Depositary such as
securities brokers and dealers, banks and trust companies that clear through, or
maintain a custodial relationship with, a direct participant, either directly or
indirectly. The rules applicable to the Depositary and its participants are on
file with the Securities and Exchange Commission.
Purchases of the notes under the Depositary's system must be made by or
through direct participants, which will receive a credit for the notes on the
Depositary's records. The beneficial ownership interest of each actual purchaser
of each note is in turn to be recorded on the direct and indirect participants'
respective records. Beneficial owners will not receive written confirmation from
the Depositary 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
interest in the notes 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 interest in notes except in
the event that use of the book-entry system for the notes is discontinued. As a
result, the ability of a person having a beneficial interest in the notes to
pledge such interest to persons or entities that do not participate in the
Depositary's system, or to otherwise take actions with respect to such interest,
may be affected by the lack of a physical certificate evidencing such interest.
In addition, the laws of some states require that certain persons take physical
delivery in definitive form of securities that they own and that security
interests in negotiable instruments can only be perfected by delivery of
certificates representing the instruments. Consequently, the ability to transfer
notes evidenced by the global notes will be limited to such extent.
To facilitate subsequent transfers, all notes deposited with the Depositary
by participants in the Depositary will be registered in the name of Cede & Co.
The deposit of the notes with the Depositary and their registration in the name
of Cede & Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual beneficial owners of the notes; the Depositary's records
reflect only the identity of the direct participants to whose accounts such
notes 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.
S-39
<PAGE>
Conveyance of notices and other communications by the Depositary 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.
Payments of principal, interest and premium, if any, on the notes will be
made to Cede & Co. The Depositary's practice is to credit direct participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason to
believe that it will not receive payment on such payment date. Payments by
participants to beneficial owners will be governed by standing instructions and
customary practices, as is the case with securities for the accounts of
customers in bearer form or registered in "street-name," and will be the
responsibility of each participant and not of the Depositary, the underwriters,
or Park Place, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, interest and premium, if any, to
Cede & Co. is the responsibility of Park Place or the respective trustees.
Disbursement of such payments to direct participants is the responsibility of
the Depositary, and disbursement of such payments to the beneficial owners of
the notes is the responsibility of direct and indirect participants in the
Depositary.
CERTIFICATED NOTES
The Depositary may discontinue providing its services as securities
depository with respect to the notes at any time by giving reasonable notice to
Park Place. Under such circumstances and in the event that a successor
securities depository is not obtained, certificates for the notes are required
to be printed and delivered. In addition, Park Place may decide to discontinue
use of the system of book-entry transfers through the Depositary (or a successor
securities depository). In that event, certificates will be printed and
delivered.
Park Place will not have any responsibility or obligation to participants in
the Depositary or the persons for whom they act as nominees with respect to the
accuracy of the records of the Depositary, its nominee or any direct or indirect
participant with respect to any ownership interest in the notes, or with respect
to payments to or providing of notice for the direct participants, the indirect
participants or the beneficial owners of the notes.
The information contained herein under the caption "Description of
Notes--Book-Entry System, Form and Delivery" concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that Park Place
believes to be reliable. Neither Park Place, the trustee nor the underwriters,
dealers or agents take responsibility for the accuracy or completeness of this
information.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriters in immediately
available funds. Payments in respect of the notes represented by global notes
(including principal, premium, if any, and interest) will be made in immediately
available funds to the accounts specified by the Depositary. With respect to
notes represented by Certificated Notes, Park Place will make all payments of
principal, premium, if any, and interest, by mailing a check to the registered
address of each holder of such notes. The notes will trade in the Depositary's
Same-Day Funds Settlement System until maturity, or until the notes are issued
in certificated form, and secondary market trading activity in the notes will
therefore be required by the Depositary to settle in immediately available
funds. No can provide no assurance as to the effect, if any, of settlement in
immediately available funds on trading activity in the notes.
S-40
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the purchase agreement
among us and the underwriters in the table below, we have agreed to sell to the
underwriters, and each of the underwriters severally and not jointly has agreed
to purchase from us, the aggregate principal amount of the notes set forth
opposite its name below. The underwriters have agreed, subject to the terms and
conditions set forth in the purchase agreement, to purchase all of the notes
being sold pursuant to that agreement if any of the notes being sold pursuant to
that agreement are purchased.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Deutsche Bank Securities Inc................................ $120,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................... 80,000,000
Banc of America Securities LLC.............................. 60,000,000
BNY Capital Markets, Inc.................................... 20,000,000
Commerzbank Capital Markets Corp............................ 20,000,000
First Union Securities, Inc................................. 20,000,000
Scotia Capital (USA) Inc.................................... 20,000,000
SG Cowen Securities Corporation............................. 20,000,000
Fleet Securities, Inc....................................... 16,000,000
Bear, Stearns & Co. Inc..................................... 12,000,000
Wasserstein Perella Securities, Inc......................... 12,000,000
------------
Total............................................... $400,000,000
============
</TABLE>
The purchase agreement provides that the obligations of the underwriters to
pay for and accept delivery of the notes are subject to, among other conditions,
the delivery of specified legal opinions by their counsel.
We will indemnify the underwriters against liabilities incurred in
connection with the offering, and will contribute to payments that the
underwriters may be required to make in connection with the offering.
The underwriters propose initially to offer the notes directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement, and to certain dealers at such price less a concession not in excess
of 0.25% of the principal amount of the notes. The underwriters may allow, and
such dealers may reallow, a discount not in excess of 0.25% of the principal
amount of the notes to certain other dealers. After the initial offering of the
notes, the offering price, concession and discount may be changed.
In connection with the offering, certain persons participating in the
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the notes after the offering. Specifically, the underwriters may
bid for and purchase the notes in the open market to stabilize the price of the
notes. The underwriters may also overallot this offering, creating a syndicate
short position. In addition, the underwriters may bid for and purchase the notes
in market-making transactions and impose penalty bids. These activities may
stabilize or maintain the market price of the notes above market levels that may
otherwise prevail. The underwriters are not required to engage in these
activities and, if commenced, may end these activities at any time. Neither we
nor the underwriters make any representation or prediction as to the magnitude
or direction of any effect these transactions may have on the price of the
notes.
There is no public trading market for the notes and we do not intend to
apply for listing of the notes on any national securities exchange or for
quotation of the notes on any automated dealer
S-41
<PAGE>
quotation system. We have been advised by the underwriters that they presently
intend to make a market in the notes after the consummation of the offering,
although they are under no obligation to do so and may discontinue any
market-making activities at any time without any notice. Prior to the offering,
there has been no active market for the notes. No assurance can be given as to
the liquidity of, or trading market for, the notes or an active public market
for the notes to develop. If an active trading market for the notes does not
develop, the market price and liquidity of the notes may be adversely affected.
If the notes are traded, they may trade at a discount from their initial
offering price, depending on prevailing interest rates, the market for similar
securities, our performance and certain other factors.
Some of the underwriters and their affiliates have provided investment and
commercial banking and financial advisory services from time to time for us in
the ordinary course of business for which they have received customary fees. Any
of the underwriters or their respective affiliates may in the future engage in
investment banking or other transactions of a financial nature with us or our
affiliates, including the provision of advisory services and the making of loans
to us or our affiliates, for which they would receive customary fees or other
payments. As described under "Use of Proceeds," we intend to use a portion of
the net proceeds from the offering of the notes to repay indebtedness
outstanding under our $1.9 billion 364-day revolving credit facility. The
lenders under our $1.9 billion credit facility include affiliates of the
following underwriters: Deutsche Bank Securities Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Banc of America Securities LLC, BNY Capital
Markets, Inc., Commerzbank Capital Markets Corp., First Union Securities, Inc.,
Scotia Capital (USA) Inc., SG Cowen Securities Corporation and Fleet Securities,
Inc., nine of the underwriters. It is expected that these lenders will in the
aggregate receive more than 10% of the net proceeds from the offering of the
notes in the form of repayment of borrowings outstanding under our credit
facility. Accordingly, the offering of the notes is being made pursuant to
Rule 2710(c)(8) of the Conduct Rules of the National Association of Securities
Dealers, Inc., Deutsche Bank Securities Inc. will act as "qualified independent
underwriter" as defined pursuant to Rule 2720(b)(15) of the Conduct Rules and
will assume the responsibilities in connection therewith.
LEGAL MATTERS
Latham & Watkins, Los Angeles, California, will pass upon various legal
matters for us relating to the issuance and sale of the notes. Cadwalader,
Wickersham & Taft, New York, New York, will pass upon various legal matters for
the underwriters relating to the offering.
S-42
<PAGE>
PROSPECTUS
$1,000,000,000
[LOGO]
DEBT SECURITIES, PREFERRED STOCK,
DEPOSITARY SHARES, COMMON STOCK AND WARRANTS
---------------------
We may offer and sell from time to time in one or more classes or series and
in amounts, at prices and on terms that we will determine at the time of
offering, with an aggregate initial offering price of up to $1,000,000,000:
- debt securities, which may consist of debentures, notes or other types of
debt;
- shares of preferred stock, $.01 par value per share;
- shares of preferred stock represented by depositary shares;
- shares of common stock, $.01 par value per share; and
- warrants to purchase debt securities, preferred stock, depositary shares
or common stock.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD,
THE MISSISSIPPI GAMING COMMISSION, THE NEW JERSEY CASINO CONTROL COMMISSION NOR
THE LOUISIANA GAMING CONTROL BOARD HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL AND IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS FEBRUARY 8, 1999
<PAGE>
WE HAVE NOT AUTHORIZED ANY DEALER, SALESMAN OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE ACCOMPANYING SUPPLEMENT TO
THIS PROSPECTUS. YOU MUST NOT RELY UPON ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT AS IF WE HAD AUTHORIZED IT. THIS PROSPECTUS AND THE
ACCOMPANYING SUPPLEMENT TO THIS PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH THEY RELATE, NOR DO THIS PROSPECTUS AND THE ACCOMPANYING
SUPPLEMENT TO THIS PROSPECTUS CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE
INFORMATION CONTAINED IN THIS PROSPECTUS AND THE SUPPLEMENT TO THIS PROSPECTUS
IS ACCURATE AS OF THE DATES ON THEIR COVERS. WHEN WE DELIVER THIS PROSPECTUS OR
A SUPPLEMENT OR MAKE A SALE PURSUANT TO THIS PROSPECTUS, WE ARE NOT IMPLYING
THAT THE INFORMATION IS CURRENT AS OF THE DATE OF THE DELIVERY OR SALE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
Incorporation Of Certain Documents By Reference............. 1
Disclosure Regarding Forward-Looking Statements............. 2
The Company................................................. 2
Use Of Proceeds............................................. 3
Ratio Of Earnings To Fixed Charges.......................... 3
Description Of Debt Securities.............................. 3
Description Of Capital Stock................................ 12
Common Stock................................................ 12
Preferred Stock............................................. 13
Description Of Depositary Shares............................ 15
Description Of Warrants..................................... 18
Plan Of Distribution........................................ 20
Legal Matters............................................... 21
Experts..................................................... 21
</TABLE>
i
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "Commission") utilizing a "shelf"
registration process. Under this shelf registration process, we may sell any
combination of the securities described in this prospectus in one or more
offerings up to an aggregate initial offering price of $1,000,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the next heading
"Where You Can Find More Information."
When we refer to "we," "our" and "us" in this prospectus, we mean Park Place
Entertainment Corporation, excluding, unless the context otherwise requires or
as otherwise expressly stated, our subsidiaries. When we refer to "you" or
"yours," we mean the holders of the applicable series of securities.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities and
Exchange Act of 1934, and file annual, quarterly and special reports, proxy
statements and other information with the Commission. You may read and copy any
reports, proxy statements and other information we file at the Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Please call the Commission at 1-800-SEC-0300 for
further information on the public reference rooms. You may also access filed
documents at the Commission's web site at http://www.sec.gov. In addition, you
may inspect reports and other information we file at the office of the New York
Stock Exchange ("NYSE") at 20 Broad Street, New York, New York 10005.
We have filed a registration statement on Form S-3 and related exhibits with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act"). The registration statement contains additional information about us and
the securities. You may inspect the registration statement and exhibits without
charge and obtain copies from the Commission at prescribed rates at the
locations set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information. We
incorporate by reference the following documents we filed with the Commission:
- Amendment No. 1 to the Company's Registration Statement on Form 10 filed
with the Commission on December 18, 1998;
- Quarterly Report on Form 10-Q for the quarter ended September 30, 1998;
- Current Reports on Form 8-K filed with the Commission on November 25,
1998, December 16, 1998, January 8, 1999, January 20, 1999 and
February 5, 1999;
- The description of the Company's Preferred Share Purchase Rights contained
in our Registration Statement on Form 8-A filed with the Commission on
December 30, 1998; and
- all documents filed by us with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act after the date of this
prospectus and before the termination of the offering.
1
<PAGE>
You may request a free copy of any of the documents incorporated by
reference in this prospectus (other than exhibits, unless they are specifically
incorporated by reference in the documents) by writing or telephoning us at the
following address:
Investor Relations
Park Place Entertainment Corporation
3930 Howard Hughes Parkway
Las Vegas, Nevada 89109
(702) 699-5000
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the dates on the front of these documents.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such statements are indicated by words or phrases
such as "anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about us and our subsidiaries, including, among
other things, factors discussed in our filings with the Commission and the
following:
- the effect of economic, credit and capital market conditions in general
and on gaming companies in particular;
- our construction and development activities;
- our ability to successfully integrate our operations with Grand Casinos,
Inc.;
- the impact of competition, particularly from other gaming and hotel/gaming
operations;
- changes in laws or regulations, third party relations and approvals and
decisions of courts, regulators and governmental bodies; and
- changes in customer demand.
Consequently, actual events and results may vary significantly from those
included in or contemplated or implied by such statements.
THE COMPANY
We are the world's largest gaming company, as measured by casino square
footage and revenues, and the only casino gaming company with a leading presence
in Nevada, New Jersey and Mississippi--the three largest gaming markets in the
United States.
We were formed to succeed to the gaming business of Hilton Hotels
Corporation ("Hilton"). On December 31, 1998, Hilton distributed all of our
common stock to Hilton's stockholders and we became a publicly traded
corporation. Following the Hilton Distribution, we acquired the Mississippi
gaming operations of Grand Casinos, Inc. by means of a merger of our
wholly-owned subsidiary into Grand with Grand surviving the merger. Immediately
prior to the merger, Grand separated its Mississippi gaming business from its
non-Mississippi business (comprised primarily of the management of Indian-owned
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casinos and certain other assets and liabilities) through the distribution of
all of the common stock of Lakes Gaming, Inc. to the shareholders of Grand.
Our principal executive offices are located at 3930 Howard Hughes Parkway,
Las Vegas, Nevada 89109, and our telephone number is (702) 699-5000.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes, including repaying, redeeming or repurchasing
existing debt, and for working capital, capital expenditures and other
acquisitions. We may invest funds not required immediately for such purposes in
short-term investment grade securities.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges are as follows for the periods
indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, FISCAL YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ 3.4x 3.8x 2.4x 2.1x 4.0x 3.8x 4.1x
</TABLE>
We have computed the ratio of earnings to fixed charges by dividing income
before income taxes and minority interests plus fixed charges (excluding
capitalized interest) by fixed charges.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of our debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms of the series in a supplement to this
prospectus. Accordingly, for a description of the terms of any series of debt
securities, you must refer to both the prospectus supplement relating to that
series and the description of the debt securities set forth in this prospectus.
A prospectus supplement may change any of the terms of the debt securities
described in this prospectus.
We may offer under this prospectus up to $1,000,000,000 aggregate principal
amount of debt securities, or if debt securities are issued at a discount, or in
a foreign currency or composite currency, such principal amount as may be sold
for an initial public offering price of up to $1,000,000,000.
The debt securities will be issued under an indenture between us and a
trustee chosen by us. We have summarized select portions of the indenture below.
The summary does not restate the indenture in its entirety. The form of the
indenture, which is subject to such amendments or supplements as may be adopted
from time to time, has been filed as an exhibit to the registration statement
and we urge you to read the indenture because it, and not this description,
defines your rights as holders of debt securities issued under the indenture.
Capitalized terms used in the summary have the meaning specified in the
indenture.
GENERAL
The debt securities will be our direct obligations, which may be secured or
unsecured, and which may be senior or subordinated indebtedness. We may issue an
unlimited amount of debt securities, in one or more series, under the indenture.
The terms of each series of debt securities will be established by a Board
Resolution or in a supplemental indenture. We need not issue all debt securities
of one series at the same time and, unless otherwise provided, we may reopen a
series, without the consent of the holders of the debt securities of that
series, for issuances of additional debt securities of that series.
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There may be more than one trustee under the indenture, each with respect to
one or more series of debt securities. Any trustee may resign or be removed by
us and we will appoint a successor trustee. Each trustee will be a trustee of a
trust under the indenture separate and apart from the trust administered by any
other trustee under the indenture. Except as otherwise indicated in this
prospectus, any action taken by the trustee may be taken by the trustee only
with respect to the series of debt securities for which it is the trustee.
We will set forth in a prospectus supplement (including any pricing
supplement) relating to any series of debt securities being offered, the
aggregate principal amount and the following terms of the debt securities:
- the title of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the price (expressed as a percentage of the aggregate principal amount) at
which we will sell the debt securities;
- whether we will issue the debt securities at a discount and the portion of
the principal amount of the debt securities payable upon declaration of
acceleration of the maturity of the securities or upon redemption, if
other than the principal amount, and the rate at which the original issue
discount will accrue;
- the date on which we will pay the principal on the debt securities;
- the rate (which may be fixed or variable) or the method used to determine
the rate (including any commodity, commodity index, stock exchange index
or financial index) at which the debt securities will bear interest, the
date from which interest will accrue, the date on which interest will be
payable and any regular record date for the interest payable on any
interest payment date;
- the place where we will pay (or the method of payment of) principal,
premium and interest on the debt securities, and where holders may
surrender the debt securities for conversion, registration of transfer or
exchange;
- any obligation we have to redeem or purchase the debt securities pursuant
to any sinking fund or analogous provisions or at the option of a holder
of debt securities;
- our right to redeem the debt securities and the date on which and the
price at which and the terms and conditions upon which we may redeem the
debt securities;
- the denominations in which we will issue the debt securities, if other
than denominations of $1,000 and any integral multiple thereof;
- provisions, if any, for the defeasance or discharge of our obligations
with respect to the debt securities;
- whether we will issue the debt securities in registered or bearer form;
- the currency in which we will pay principal, premium and interest on the
debt securities;
- if we will pay principal, premium or interest on the debt securities in
one or more currencies other than those in which the debt securities are
denominated, the manner in which we will determine the exchange rate on
these payments;
- the manner in which we will determine the amounts of payment of principal,
premium or interest on the debt securities if these amounts may be
determined by reference to an index based on a currency other than that in
which the debt securities are denominated or designated or by reference to
a commodity, commodity index, stock exchange index or financial index;
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<PAGE>
- any addition to, or change or deletion of, any events of default or
covenants in the indenture;
- a discussion of any material and/or special United States Federal income
tax considerations applicable to the debt securities;
- any depositaries, trustees, interest rate calculation agents, exchange
rate calculation agents or other agents with respect to the debt
securities other than those originally appointed;
- whether we will issue the debt securities in the form of global securities
and whether we will issue the global securities in temporary or permanent
global form;
- any rights of the holders of the debt securities to convert the debt
securities into other securities or property and the terms and conditions
of the conversion;
- any subordination provisions relating to the debt securities;
- any listing of the debt securities on a securities exchange;
- any provisions relating to any security provided for the debt securities;
and
- any other terms of the debt securities that will not be inconsistent with
the indenture.
We may issue debt securities at a discount below their stated principal
amount. Even if we do not issue the debt securities below their stated principal
amount, for United States Federal income tax purposes the debt securities may be
deemed to have been issued with a discount because of certain interest payment
characteristics. We will set forth in a prospectus supplement the United States
Federal income tax considerations applicable to debt securities issued at a
discount or deemed to be issued at a discount. We will also set forth in a
prospectus supplement the special United States Federal income tax
considerations or other restrictions or terms applicable to debt securities
issuable in bearer form, offered exclusively to foreigners or denominated in a
foreign currency.
DENOMINATIONS, REGISTRATION, TRANSFER AND EXCHANGE
Unless we specify otherwise in the prospectus supplement, the debt
securities of any series will be issuable only in denominations of $1,000 and
integral multiples thereof, and will be payable only in U.S. dollars.
We may issue the debt securities in whole or in part in the form of one or
more global securities that will be deposited with, or on behalf of, a
depositary identified in the applicable prospectus supplement. We may issue the
global securities in either registered or bearer form and in either temporary or
permanent form. We will describe the specific terms of the depositary
arrangement with respect to a series of debt securities in the prospectus
supplement.
You may transfer or exchange certificated debt securities at any office we
maintain for this purpose in accordance with the terms of the indenture. We will
not charge a service fee for any transfer or exchange of certificated debt
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge we are required to pay in connection with a transfer
or exchange.
You may effect the transfer of certificated debt securities and the right to
receive the principal, premium and interest on certificated debt securities only
by surrendering the certificate representing those certificated debt securities
and either reissuance by us or the trustee of the certificate to the new holder
or the issuance by us or the trustee of a new certificate to the new holder.
We are not required to:
- register, transfer or exchange debt securities of any series during a
period beginning at the opening of business 15 days before the day we
transmit a notice of redemption of debt securities of the series selected
for redemption and ending at the close of business on the day of the
transmission, or
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- to register, transfer or exchange any debt security so selected for
redemption in whole or in part, except the unredeemed portion of any debt
security being redeemed in part.
COVENANTS
We will set forth in the applicable prospectus supplement any restrictive
covenants applicable to an issue of debt securities.
CONSOLIDATION, MERGER OR SALE OF ASSETS
We may not consolidate or merge with or into, or sell, assign, convey or
transfer our properties and assets substantially in their entirety (computed on
a consolidated basis) to another corporation, person or entity unless:
- in the case of a consolidation or merger, (a) we are the surviving
corporation, or (b) the successor or transferree is an entity organized
and validly existing under the laws of the United States, any State
thereof or the District of Columbia and expressly assumes our obligations
under the debt securities and the indenture; and
- immediately after giving effect to the transaction, no event of default
exists.
EVENTS OF DEFAULT
Each of the following is an Event of Default with respect to a series of
debt securities:
- default in the payment of any interest upon any debt security of that
series when it becomes due and payable, and continuance of that default
for a period of 30 days;
- default in the payment of principal of or premium on any debt security of
that series when due and payable;
- default in the deposit of any sinking fund payment, when and as due in
respect of any debt security of that series;
- default in the performance or breach by us of any other covenant or
warranty in the indenture (other than a covenant or warranty that has been
included in the indenture solely for the benefit of a series of debt
securities other than that series), which default continues uncured for a
period of 60 days after we receive written notice from the trustee or we
and the trustee receive written notice from the holders of at least 25% in
principal amount of the outstanding debt securities of that series as
provided in the indenture;
- the acceleration of the maturity date of any of our indebtedness, other
than Non-recourse Indebtedness (as defined below), at any one time, in an
amount exceeding the greater of (1) $25 million and (2) 5% of Consolidated
Net Tangible Assets (as defined below), if the acceleration is not
annulled within 30 days thereafter;
- certain events of bankruptcy, insolvency or reorganization; and
- any other Event of Default provided with respect to debt securities of
that series that is described in the applicable prospectus supplement
accompanying this prospectus.
"Non-recourse Indebtedness" means indebtedness the terms of which provide
that the lender's claim for repayment of such indebtedness is limited solely
to a claim against the property which secures such indebtedness.
"Consolidated Net Tangible Assets" means the total amount of assets
(including investments in Joint Ventures) of the Company and its
subsidiaries (less applicable depreciation, amortization and other valuation
reserves) after deducting therefrom (a) all current liabilities of the
Company and its
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subsidiaries (excluding (i) the current portion of long-term indebtedness,
(ii) intercompany liabilities and (iii) any liabilities which are by their
terms renewable or extendible at the option of the obligor thereon to a time
more than 12 months from the time as of which the amount thereof is being
computed) and (b) all goodwill, trade names, trademarks, patents,
unamortized debt discount and any other like intangibles, all as set forth
on the most recent consolidated balance sheet of the Company and computed in
accordance with generally accepted accounting principles.
If an Event of Default with respect to outstanding debt securities of any
series occurs and is continuing, then the trustee or the holders of at least 25%
in principal amount of outstanding debt securities of that series may declare,
in a written notice, the principal amount (or specified amount) plus accrued and
unpaid interest (and premium, if payable) on all debt securities of that series
to be immediately due and payable. At any time after a declaration of
acceleration with respect to debt securities of any series has been made, the
holders of a majority in principal amount of the outstanding debt securities of
that series may rescind and annul the acceleration if:
- the holders act before the trustee has obtained a judgment or decree for
payment of the money due;
- we have paid or deposited with the trustee a sum sufficient to pay overdue
interest and overdue principal other than the accelerated interest and
principal; and
- we have cured or the holders have waived all Events of Default, other than
the non-payment of accelerated principal and interest with respect to debt
securities of that series, as provided in the indenture.
We refer you to the prospectus supplement relating to any series of debt
securities that are discount securities for the particular provisions relating
to acceleration of a portion of the principal amount of the discount securities
upon the occurrence of an Event of Default.
The trustee has no obligation to exercise any of its rights or powers under
the indenture at the request of any holder of outstanding debt securities,
unless the trustee receives indemnity satisfactory to it against any loss,
liability or expense. Subject to certain rights of the trustee, the holders of a
majority in principal amount of the outstanding debt securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the debt securities of that
series.
No holder of any debt security of any series will have any right to
institute any judicial or other proceeding with respect to the indenture or for
the appointment of a receiver or trustee, or for any remedy under the indenture,
unless:
- that holder has previously given to the trustee written notice of a
continuing Event of Default with respect to debt securities of that
series; and
- the holders of at least a 25% in principal amount of outstanding debt
securities of that series have made written request, and offered
reasonable indemnity, to the trustee to institute the proceeding as
trustee, and the trustee has not received from the holders of a majority
in principal amount of the outstanding debt securities of that series a
direction inconsistent with that request and has failed to institute the
proceeding within 60 days.
Notwithstanding the foregoing, the holder of any debt security will have an
absolute and unconditional right to receive payment of the principal, premium
and any interest on that debt security on or after the due dates expressed in
that debt security and to institute suit for the enforcement of payment.
Within 120 days after the end of our fiscal year we will furnish to the
trustee a statement as to compliance with the indenture. The trustee may
withhold notice to the holders of debt securities of any series of any Default
or Event of Default (except in payment on any debt securities of that series)
with
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respect to debt securities of that series if it in good faith determines that
withholding notice is in the interest of the holders of those debt securities.
MODIFICATION AND WAIVER
We may modify the indenture, without prior notice to or consent of any
holders, for any of the following purposes:
- to evidence the succession of another corporation to our rights and the
assumption by the successor of our covenants and obligations in the
indenture and the debt securities;
- to add to the covenants for the benefit of the holders of the debt
securities or to surrender any right or power conferred upon us in the
indenture;
- to add any Events of Default;
- to add or change any provision of the indenture to permit or facilitate
the issuance of debt securities of any series in bearer form, to permit
bearer securities to be issued in exchange for registered securities, to
permit bearer securities to be issued in exchange for bearer securities of
other denominations or to permit the issuance of debt securities of any
series in uncertificated form, provided that the action will not adversely
affect the interests of the holders of debt securities or coupons in any
material respect;
- to change or eliminate any provision of the indenture, provided that the
change or elimination will become effective only when there is no
outstanding debt security issued under the indenture or coupon of any
series created prior to the modification which is entitled to the benefit
of the provision and as to which the modification would apply;
- to secure the debt securities or to provide that any of our obligations
under the debt securities or the indenture will be guaranteed and the
terms and conditions for the release or substitution of the security or
guarantee;
- to supplement any provisions of the indenture to permit or facilitate the
defeasance and discharge of any series of debt securities, provided that
the action will not adversely affect the interests of the holders of the
debt securities or coupons in any material respect;
- to establish the form or terms of debt securities and coupons as permitted
by the indenture;
- to evidence and provide for a successor or other trustee with respect to
one or more series of debt securities and to add or change any provision
of the indenture to provide for or facilitate the administration of the
trusts by more than one trustee; or
- to cure any ambiguity, to correct or supplement any provision of the
indenture which may be defective or inconsistent with any other provision
of the indenture, to eliminate any conflict between the terms of the
indenture and the debt securities and the Trust Indenture Act or to make
any other provisions which will not be inconsistent with any provision of
the indenture; provided such other provisions will not adversely affect
the interest of the holders of outstanding debt securities or coupons in
any material respect.
We may modify and amend the indenture with the written consent of at least a
majority in principal amount of the outstanding debt securities of each series
affected by the modifications or amendments; PROVIDED, HOWEVER, that such
modifications may not, without the consent of the holder of each outstanding
debt security of each series affected thereby:
- change the stated maturity of any debt security or coupon;
- reduce the principal amount of any payment to be made on any debt security
or coupon;
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- reduce the rate of interest (or extend the time for payment of interest)
or premium payable upon redemption of any debt security;
- change the coin or currency in which any debt security or any premium or
interest is payable;
- reduce the amount of the principal of a discount security that would be
due and payable upon a declaration of acceleration of the maturity;
- impair the right to institute suit for the enforcement of any payment on
or after the due date thereof;
- alter any redemption provisions in a manner adverse to the holders of the
debt securities;
- reduce the percentage in principal amount of the outstanding debt
securities;
- adversely affect the right of any holder to convert any debt security;
- modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the indenture
cannot be modified or waived without the consent of the holder of each
outstanding debt security affected thereby; or
- modify any provision described in the applicable prospectus supplement as
requiring the consent of each affected holder of debt securities.
A modification which changes or eliminates any covenant or other provision
of the indenture relating to one or more particular series of debt securities
and coupons, or which modifies the rights of the holder of debt securities and
coupons of that series, will be deemed not to affect the rights of the holders
of debt securities and coupons of any other series.
The holders of at least a majority in principal amount of the outstanding
debt securities of any series, by notice to the trustee, may on behalf of the
holders of all debt securities of that series waive any default and its
consequences under the indenture, except:
- a continuing default in the payment of interest on, premium or the
principal amount of any debt security held by a nonconsenting holder; or
- a default of a covenant or provision which cannot be modified or amended
without the consent of the holder of each outstanding debt security of
each series affected.
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
LEGAL DEFEASANCE. We may be discharged from any and all obligations in
respect of the debt securities of any series except for certain obligations:
- to pay additional amounts, if any, upon the occurrence of certain tax,
assessment or government charge events with respect to payments on the
debt securities;
- to register the transfer or exchange of debt securities of the series;
- to replace stolen, lost or mutilated debt securities of the series;
- to maintain paying agencies; and
- to hold money in payment for trust.
We will be discharged upon our deposit with the trustee, in trust, of money
and/or government obligations that will provide money in an amount sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay and discharge each installment of principal, premium and
interest on and any mandatory sinking fund payments in respect of the debt
securities of that series on the stated maturity of those payments.
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We may be discharged only if, among other things, we have delivered to the
trustee an opinion of counsel stating that we have received from, or there has
been published by, the United States Internal Revenue Service a ruling (the "IRS
Ruling") or, since the date of execution of the indenture, there has been a
change in the applicable United States Federal income tax law, in either case to
the effect that, the holders of the debt securities of that series will not
recognize income, gain or loss for United States Federal income tax purposes as
a result of the deposit, defeasance and discharge.
DEFEASANCE OF CERTAIN COVENANTS. Upon compliance with certain conditions,
we may omit to comply with certain restrictive covenants contained in the
indenture and any omission to comply with the obligations will not constitute a
Default or Event of Default with respect to the debt securities. The conditions
include, among others:
- depositing with the trustee money and/or government obligations that,
through the payment of interest and principal in accordance with their
terms, will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants to pay
principal, premium and interest on and any mandatory sinking fund payments
in respect of the debt securities of that series on the date those
payments are due; and
- delivering to the trustee an IRS Ruling or an opinion of counsel to the
effect that the holders of the debt securities of the series will not
recognize income, gain or loss for United States Federal income tax
purposes as a result of the deposit and related covenant defeasance.
LIMITED LIABILITY OF CERTAIN PERSONS
No stockholder, incorporator, employee officer or director, as such, past,
present or future of our company or any successor corporation or any of our
affiliates will have any personal liability for our obligations under the
indenture or the debt securities because of his, her or its status as a
stockholder, incorporator, employee officer or director.
MANDATORY DISPOSITION PURSUANT TO GAMING LAWS
Each holder, by accepting the debt securities, will be deemed to have agreed
to apply for a license, qualification or a finding of suitability within the
required time period if required to do so under the applicable gaming laws of
the gaming authority of any jurisdiction of which we or any of our subsidiaries
conducts or proposes to conduct gaming. If the holder fails to apply or become
licensed or qualified or is found unsuitable, we have the right, at our option
to:
- require that person to dispose of their debt securities or beneficial
interest within 30 days of receipt of notice of our election or such
earlier date as may be requested by the gaming authority; or
- redeem those debt securities at a redemption price equal to the lesser of
(i) that person's cost or (ii) 100% of their principal amount, plus
accrued and unpaid interest, if any, to the earlier of the redemption date
or the date of the finding of unsuitability.
We will notify the trustee in writing of any such redemption as soon as
practicable. We will not be responsible for any costs or expenses any holder may
incur in connection with its application for a license, qualification or a
finding of suitability.
CONVERSION RIGHTS
We will set forth in the applicable prospectus supplement the terms and
conditions, if any, upon which the debt securities are convertible into common
stock or preferred stock. Those terms will include:
- whether the debt securities are convertible into common stock or preferred
stock;
- the conversion price (or manner of calculation);
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- the conversion period;
- provisions regarding whether conversion will be at our option or the
option of the holders;
- the events requiring an adjustment of the conversion price; and
- provisions affecting conversion in the event of the redemption of the debt
securities.
PAYMENT AND PAYING AGENTS
The indenture will require us to duly and punctually pay the principal,
premium and interest on the debt securities as provided in the debt securities
and the indenture.
If debt securities of a series are issuable only as registered securities,
we will maintain in each place of payment for that series an office or agency
where:
- holders may present or surrender for payment debt securities of that
series;
- holders may surrender debt securities of that series for registration of
transfer or exchange; and
- we may be served with notices and demands regarding the debt securities of
that series.
If debt securities of a series are issuable as bearer securities, we will
maintain or cause to be maintained:
- in the Borough of Manhattan, the City and State of New York, an office or
agency where holders may present or surrender for payment any registered
securities of that series, where holders may surrender for registration or
transfer any registered securities of that series, where holders may
surrender debt securities of that series for exchange or redemption, where
we may be served with notices and demands regarding the debt securities of
that series and where holders may present or surrender for payment bearer
securities of that series and related coupons in the circumstances
described in the following paragraph (and not otherwise);
- subject to any applicable laws or registration, in a place of payment for
that series which is located outside the United States, an office or
agency where holders may present and surrender for payment debt securities
of that series and related coupons; PROVIDED, HOWEVER, that if the debt
securities of that series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock
exchange so requires, we will maintain a paying agent for the debt
securities of that series in London, Luxembourg or any other required city
located outside the United States, so long as the debt securities of that
series are listed on that exchange; and
- subject to any applicable laws or regulations, in a place of payment for
that series located outside the United States, an office or agency where
holders may surrender any registered securities of that series for
registration of transfer, where holders may surrender for exchange or
redemption debt securities of that series and where we may receive notices
and demands regarding the debt securities of that series.
We will give prompt written notice to the applicable trustee of the
locations, and any change in the locations, of such offices or agencies. If at
any time we fail to maintain any required office or agency or fail to furnish
the applicable trustee with the address, holders may make or serve such
presentations, surrenders, notices and demands at the corporate trust office of
the applicable trustee, except that holders may present and surrender bearer
securities of that series and the related coupons for payment at the offices
specified in the applicable debt security. We will appoint the applicable
trustee (or in the case of bearer securities, we may appoint such other agent as
may be specified in the applicable prospectus supplement) as our agent to
receive the foregoing presentations, surrenders, notices and demands.
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We will make no payment of principal, premium or interest on bearer
securities at any of our offices or agencies in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; PROVIDED, HOWEVER, that, if
the debt securities of a series are denominated and payable in U.S. dollars, we
will pay principal and any premium and interest on the debt securities of that
series, if specified in the applicable prospectus supplement, at the office of
our paying agent in the Borough of Manhattan, the City and State of New York, if
(but only if) payment in U.S. dollars of the full amount of such principal,
premium, interest or additional amounts, as the case may be, at all offices or
agencies outside the United States maintained for the purpose by us in
accordance with the indenture is illegal or effectively precluded by exchange
controls or other similar restrictions.
DESCRIPTION OF CAPITAL STOCK
GENERAL
This prospectus describes certain general terms of our capital stock. For a
more detailed description of these securities, we refer you to the applicable
provisions of Delaware law and our Amended and Restated Certificate of
Incorporation (the "Amended and Restated Certificate"). When we offer to sell a
particular series of these securities, we will describe the specific terms of
the series in a supplement to this prospectus. Accordingly, for a description of
the terms of any series of securities, you must refer to both the prospectus
supplement relating to that series and the description of the securities set
forth in this prospectus. A prospectus supplement may change any of the terms of
the securities described in this prospectus.
Pursuant to our Amended and Restated Certificate, our authorized capital
stock consists of 400,000,000 shares of common stock, par value $0.01 per share,
and 100,000,000 shares of preferred stock, par value $0.01 per share. At
January 1, 1999, we had outstanding approximately 303,000,000 shares of common
stock and no shares of preferred stock.
COMMON STOCK
Subject to any preferential rights that our board of directors may grant in
connection with the future issuance of preferred stock, each holder of common
stock is entitled to one vote per share on all matters voted upon by the
stockholders. Each holder of common stock is entitled to receive ratably any
dividends declared on the common stock by the board of directors from funds
legally available for distribution. In the event of our liquidation, dissolution
or winding up, after we pay all debts and other liabilities and any liquidation
preference on the preferred stock, each holder of common stock would be entitled
to share ratably in all of our remaining assets. The common stock has no
subscription, redemption, conversion or preemptive rights. All shares of common
stock are fully paid and nonassessable.
DELAWARE GENERAL CORPORATION LAW SECTION 203
As a corporation organized under the laws of the State of Delaware, we are
subject to Section 203 of the General Corporation Law of the State of Delaware
(the "DGCL"), which restricts certain business combinations between us and an
"interested stockholder" (in general, a stockholder owning 15% or more of our
outstanding voting stock) or that stockholder's affiliates or associates for a
period of three years following the date on which the stockholder becomes an
"interested stockholder." The restrictions do not apply if:
- prior to an interested stockholder becoming such, our board of directors
approves either the business combination or the transaction in which the
stockholder becomes an interested stockholder;
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- upon consummation of the transaction in which the stockholder becomes an
interested stockholder, the interested stockholder owns at least 85% of
our voting stock outstanding at the time the transaction commenced,
subject to certain exceptions; or
- on or after the date an interested stockholder becomes such, the business
combination is both approved by our board of directors and authorized at
an annual or special meeting of our stockholders (and not by written
consent) by the affirmative vote of at least 66 2/3% of the outstanding
voting stock not owned by the interested stockholder.
PREFERRED STOCK
Under the Amended and Restated Certificate, our board of directors is
authorized generally without stockholder approval to issue shares of preferred
stock from time to time, in one or more classes or series. Prior to the issuance
of shares of each series, the board of directors is required by the DGCL and the
Amended and Restated Certificate to adopt resolutions and file a certificate of
designation with the Secretary of State of the State of Delaware. The
certificate of designation fixes for each class or series the designations,
powers, preferences, rights, qualifications, limitations and restrictions,
including, but not limited to, the following:
- the number of shares constituting each class or series;
- voting rights;
- rights and terms of redemption (including sinking fund provisions);
- dividend rights and rates;
- dissolution;
- terms concerning the distribution of assets;
- conversion or exchange terms;
- redemption prices; and
- liquidation preferences.
All shares of preferred stock offered hereby will, when issued, be fully
paid and nonassessable and will not have any preemptive or similar rights. Our
board of directors could authorize the issuance of shares of preferred stock
with terms and conditions which could have the effect of discouraging a takeover
or other transaction that might involve a premium price for holders of the
shares or which holders might believe to be in their best interests.
We will set forth in a prospectus supplement relating to the class or series
of preferred stock being offered the following terms:
- The title and stated value of the preferred stock;
- The number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;
- The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation applicable to the preferred stock;
- Whether dividends are cumulative or non-cumulative and, if cumulative, the
date from which dividends on the preferred stock will accumulate;
- The procedures for any auction and remarketing, if any, for the preferred
stock;
- The provisions for a sinking fund, if any, for the preferred stock;
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- The provision for redemption, if applicable, of the preferred stock;
- Any listing of the preferred stock on any securities exchange;
- The terms and conditions, if applicable, upon which the preferred stock
will be convertible into common stock, including the conversion price (or
manner of calculation) and conversion period;
- Voting rights, if any, of the preferred stock;
- Whether interests in the preferred stock will be represented by depositary
shares;
- A discussion of any material and/or special United States Federal income
tax considerations applicable to the preferred stock;
- The relative ranking and preferences of the preferred stock as to dividend
rights and rights upon the liquidation, dissolution or winding up of our
affairs;
- Any limitations on issuance of any class or series of preferred stock
ranking senior to or on a parity with the class or series of preferred
stock as to dividend rights and rights upon liquidation, dissolution or
winding up of our affairs; and
- Any other specific terms, preferences, rights, limitations or restrictions
of the preferred stock.
RANK
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will rank, with respect to dividends and upon our liquidation,
dissolution or winding up:
- senior to all classes or series of our common stock and to all of our
equity securities ranking junior to the preferred stock;
- on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity with the
preferred stock; and
- junior to all of our equity securities the terms of which specifically
provide that the equity securities rank senior to the preferred stock.
The term "equity securities" does not include convertible debt securities.
PREFERRED STOCK PURCHASE RIGHTS
On December 29, 1998, our Board of Directors adopted a Preferred Share
Purchase Rights Plan ("Rights Plan") and declared a dividend distribution of one
Right on each outstanding share of our common stock and one Right on each share
of common stock issued between such date and the earliest of the Distribution
Date and the Expiration Date (as these terms are defined in the Rights Plan).
Stockholders may transfer the Rights with the common stock only until they
become exercisable.
Generally, the Rights become exercisable only if a person or group (other
than Exempt Persons, as defined below) acquires 15% or more of the then
outstanding shares of common stock or announces a tender offer which would
result in ownership by a person or group of 15% or more of the then outstanding
shares of common stock. Each Right entitles stockholders to buy one
one-hundredth of a share of a new series of junior participating preferred stock
at an exercise price of $40.
If a person or group (other than Exempt Persons) acquires 15% or more of our
shares of common stock, each holder of a Right will be entitled to receive upon
exercise a number of shares of our common stock having a market value equal to
two times the then current purchase price of the Right. If, after a person or
group acquires 15% or more of our shares of common stock, we are acquired in a
merger or engage in certain other business combination transactions or transfers
of assets, each Right entitles its
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holder to purchase, at the Right's then current price, a number of the acquiring
company's common shares having a then current market value of twice the Right's
exercise price.
Following the acquisition by a person or group of beneficial ownership of
15% or more of our common stock (other than Exempt Persons) and prior to an
acquisition of 50% or more of our common stock, our board of directors may
exchange the Rights (other than Rights owned by the person or group), in whole
or in part, at an exchange ratio described in the Rights Plan.
Prior to the acquisition by a person or group of beneficial ownership of 15%
or more of our common stock, the Rights are redeemable for $.001 per Right at
the option of the board of directors.
"Exempt Person" means:
- us or any of our subsidiaries;
- any of our or our subsidiaries' employee benefit plans;
- any entity or trustee holding shares of our capital stock for or pursuant
to the terms of any such plan or for the purpose of funding other employee
benefits for our or our subsidiaries' employees; or
- Barron Hilton or the Conrad N. Hilton Fund.
REGISTRAR AND TRANSFER AGENT
ChaseMellon Shareholder Services LLC is the registrar and transfer agent for
the common stock.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may issue depositary shares, each of which will represent a fractional
interest of a share of a particular series of preferred stock, as specified in
the applicable prospectus supplement. We will deposit with a depositary (the
"preferred stock depositary") shares of preferred stock of each series
represented by depositary shares. We will enter into a deposit agreement (each a
"deposit agreement") with the preferred stock depositary and holders from time
to time of the depositary receipts issued by the preferred stock depositary
which evidence the depositary shares ("depositary receipts"). Subject to the
terms of the deposit agreement, each owner of a depositary receipt will be
entitled, in proportion to the holder's fractional interest in the preferred
stock, to all the rights and preferences of the series of the preferred stock
represented by the depositary shares (including dividend, voting, conversion,
redemption and liquidation rights).
Immediately after we issue and deliver the preferred stock to a preferred
stock depositary, we will cause the preferred stock depositary to issue the
depositary receipts on our behalf. You may obtain copies of the applicable form
of deposit agreement and depositary receipt from us upon request. The statements
made in this section relating to the deposit agreement and the depositary
receipts are summaries of certain anticipated provisions. These summaries are
not complete and we may modify them in a prospectus supplement. For more detail
we refer you to the deposit agreement itself, which we will file as an exhibit
to the registration statement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the preferred stock to the record
holders of depositary receipts in proportion to the number of the depositary
receipts owned by the holders, subject to the obligations of holders to file
proofs, certificates and other information and to pay certain charges and
expenses to the preferred stock depositary.
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In the event of a distribution other than in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts in proportion to the number of the depositary receipts owned
by the holders, unless the preferred stock depositary determines that it is not
feasible to make the distribution, in which case the preferred stock depositary
may, with our approval, sell the property and distribute the net proceeds from
the sale to the holders.
No distribution will be made in respect of any depositary share that
represents any preferred stock converted into other securities.
WITHDRAWAL OF STOCK
Upon surrender of the depositary receipts at the corporate trust office of
the preferred stock depositary (unless we have previously called for redemption
or converted into other securities the related depositary shares), the holders
will be entitled to delivery at that office of the number of whole or fractional
shares of the preferred stock and any money or other property represented by the
depositary shares. Holders of depositary receipts will be entitled to receive
shares of the related preferred stock as specified in the applicable prospectus
supplement, but holders of the shares of preferred stock will not thereafter be
entitled to receive depositary shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever we redeem shares of preferred stock held by the preferred stock
depositary, the preferred stock depositary will concurrently redeem the number
of depositary shares representing shares of the preferred stock so redeemed,
provided we have paid the applicable redemption price for the preferred stock to
be redeemed plus an amount equal to any accrued and unpaid dividends to the date
fixed for redemption. The redemption price per depositary share will be equal to
the corresponding proportion of the redemption price and any other amounts per
share payable with respect to the preferred stock. If fewer than all the
depositary shares are to be redeemed, the depositary shares to be redeemed will
be selected pro rata (as nearly as may be practicable without creating
fractional depositary shares) or by any other equitable method determined by us.
From and after the date fixed for redemption:
- all dividends in respect of the shares of preferred stock called for
redemption will cease to accrue;
- the depositary shares called for redemption will no longer be deemed to be
outstanding; and
- all rights of the holders of the depositary receipts evidencing the
depositary shares called for redemption will cease, except the right to
receive any moneys payable upon the redemption and any money or other
property to which the holders of the depositary receipts were entitled
upon redemption and surrender to the preferred stock depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the preferred stock depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary receipts. Each record holder of these depositary receipts on the
record date (which will be the same date as the record date for the preferred
stock) will be entitled to instruct the preferred stock depositary as to the
exercise of the voting rights pertaining to the amount of preferred stock
represented by the holder's depositary shares. The preferred stock depositary
will vote the amount of preferred stock represented by the depositary shares in
accordance with the instructions, and we will agree to take all reasonable
action necessary to enable the preferred stock depositary to do so. The
preferred stock depositary will abstain from voting the amount of preferred
stock represented by the depositary shares for which it does not receive
specific instructions from the holders of depositary receipts evidencing the
depositary shares. The preferred stock depositary will not be responsible for
any failure to carry out
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any instruction to vote, or for the manner or effect of any vote made, as long
as the action or non-action is in good faith and does not result from the
preferred stock depositary's negligence or willful misconduct.
LIQUIDATION PREFERENCE
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up, the holders of each depositary receipt will be entitled to the fraction
of the liquidation preference accorded each share of preferred stock represented
by the depositary shares, as set forth in the applicable prospectus supplement.
CONVERSION OF PREFERRED STOCK
The depositary shares, as such, are not convertible into common stock or any
of our other securities or property. Nevertheless, if we so specify in the
applicable prospectus supplement relating to an offering of depositary shares,
holders may surrender depositary receipts to the preferred stock depositary with
written instructions to the preferred stock depositary to instruct us to convert
the preferred stock represented by the depositary shares into whole shares of
common stock, other shares of our preferred stock or other shares of stock. We
have agreed that upon receipt of the instructions and any amounts payable, we
will convert the depositary shares using the same procedures as those provided
for converting preferred stock. If the depositary shares evidenced by a
depositary receipt are to be converted in part only, the preferred stock
depositary will issue a new depositary receipt(s) for any depositary shares not
converted. No fractional shares of common stock will be issued upon conversion,
and if the conversion would result in a fractional share being issued, we will
pay an amount in cash equal to the value of the fractional interest based upon
the closing price of the common stock on the last business day prior to the
conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We may amend the form of depositary receipt and any provision of the deposit
agreement at any time by agreement between us and the preferred stock
depositary. However, any amendment that materially and adversely alters the
rights of the holders of depositary receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
preferred stock will not be effective unless the holders of at least 66 2/3% of
the depositary shares evidenced by the depositary receipts then outstanding
approve the amendment. No amendment will impair the right, subject to the
exceptions set forth in the depositary agreement, of any holder of depositary
receipts to surrender any depositary receipt with instructions to deliver to the
holder the related preferred stock and all money and other property, if any,
represented by the depositary receipt, except in order to comply with law. Every
holder of an outstanding depositary receipt at the time any such amendment
becomes effective will be deemed, by continuing to hold the receipt, to consent
and agree to the amendment and to be bound by the deposit agreement as amended.
We may terminate the deposit agreement upon not less than 30 days' prior
written notice to the preferred stock depositary if a majority of each series of
preferred stock affected by the termination consents to the termination. Upon
termination, the preferred stock depositary will deliver or make available to
each holder of depositary receipts, upon surrender of the depositary receipts
held by the holder, the number of whole or fractional shares of preferred stock
represented by the depositary shares evidenced by the depositary receipts
together with any other property held by the preferred stock depositary with
respect to the depositary receipt.
In addition, the deposit agreement will automatically terminate if:
- all outstanding depositary shares have been redeemed;
- there has been a final distribution of the related preferred stock in
connection with our liquidation, dissolution or winding up and the
distribution has been distributed to the holders of depositary receipts
evidencing the depositary shares representing the preferred stock; or
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- each share of the related preferred stock has been converted into our
securities which are not represented by depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the deposit agreement. In addition, we will pay the
fees and expenses of the preferred stock depositary in connection with the
performance of its duties under the deposit agreement. However, holders of
depositary receipts will pay the fees and expenses of the preferred stock
depositary for any duties requested by the holders to be performed which are
outside of those expressly provided for in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to us
notice of its election to do so, and we may at any time remove the preferred
stock depositary. Any such resignation or removal will take effect upon our
appointment of a successor preferred stock depositary. We must appoint a
successor preferred stock depositary within 60 days after delivery of the notice
of resignation or removal, and any preferred stock depositary must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward to holders of depositary
receipts any reports and communications the preferred stock depositary receives
from us relating to the preferred stock.
We will not be liable, nor will the preferred stock depositary be liable, if
we are prevented from or delayed in, by law or any circumstances beyond our
control, performing our obligations under the deposit agreement. Our obligations
and the obligations of the preferred stock depositary under the deposit
agreement will be limited to performing our duties in good faith and without
negligence (in the case of any action or inaction in the voting of preferred
stock represented by the depositary shares), gross negligence or willful
misconduct. We will not be obligated, nor will the preferred stock depositary be
obligated, to prosecute or defend any legal proceeding in respect of any
depositary receipts, depositary shares or shares of preferred stock represented
thereby unless satisfactory indemnity is furnished to us. We may rely, and the
preferred stock depositary may rely, on written advice of counsel or
accountants, or information provided by persons presenting shares of preferred
stock represented thereby for deposit, holders of depositary receipts or other
persons we believe in good faith to be competent to give such information, and
on documents we believe in good faith to be genuine and signed by a proper
party.
In the event the preferred stock depositary receives conflicting claims,
requests or instructions from holders of depositary receipts, on the one hand,
and us, on the other hand, the preferred stock depositary will be entitled to
act on such claims, requests or instructions received from us.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt securities ("debt warrants"),
preferred stock ("preferred stock warrants"), depositary shares ("depositary
shares warrants") or common stock ("common stock warrants," collectively with
the debt warrants, the preferred stock warrants and the depositary shares
warrants ("warrants")). We may issue warrants independently or together with any
other securities we offer pursuant to a prospectus supplement and the warrants
may be attached to or separate from the securities. We will issue each series of
warrants under a separate warrant agreement that we will enter into with a bank
or trust company, as warrant agent. We will set forth additional terms of the
warrants and the applicable warrant agreements in the applicable prospectus
supplement.
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DEBT WARRANTS
We will describe in the applicable prospectus supplement the terms of the
debt warrants being offered, the warrant agreement relating to the debt warrants
and the debt warrant certificates representing the debt warrants, including the
following:
- the title of the debt warrants;
- the aggregate number of the debt warrants;
- the price or prices at which the debt warrants will be issued;
- the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise of the debt warrants, and the
procedures and conditions relating to the exercise of the debt warrants;
- the designation and terms of any related debt securities with which the
debt warrants are issued, and the number of the debt warrants issued with
each security;
- the date, if any, on and after which the debt warrants and the related
debt securities will be separately transferable;
- the principal amount of debt securities purchasable upon exercise of each
debt warrant, and the price at which the principal amount of the debt
securities may be purchased upon exercise;
- the date on which the right to exercise the debt warrants will commence,
and the date on which the right will expire;
- the maximum or minimum number of the debt warrants which may be exercised
at any time;
- a discussion of the material United States Federal income tax
considerations applicable to the exercise of the debt warrants; and
- any other terms of the debt warrants and terms, procedures and limitations
relating to the exercise of the debt warrants.
Holders may exchange debt warrant certificates for new debt warrant
certificates of different denominations, and may exercise debt warrants at the
corporate trust office of the warrant agent or any other office indicated in the
applicable prospectus supplement. Prior to the exercise of their debt warrants,
holders of debt warrants will not have any of the rights of holders of the
securities purchasable upon the exercise and will not be entitled to payments
principal, premium or interest on the securities purchasable upon the exercise.
OTHER WARRANTS
We will describe in the applicable prospectus supplement the terms of the
preferred stock warrants, depositary shares warrants and common stock warrants
being offered, including the following:
- the title of the warrants;
- the securities for which the warrants are exercisable;
- the price or prices at which the warrants will be issued;
- the number of the warrants issued with each share of preferred stock,
common stock or depositary share;
- any provisions for adjustment of the number or amount of shares of
preferred stock, common stock or depositary shares receivable upon
exercise of the warrants or the exercise price of the warrants;
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- if applicable, the date on and after which the warrants and the related
preferred stock, common stock or depositary shares will be separately
transferable;
- if applicable, a discussion of the material United States Federal income
tax considerations applicable to the exercise of the warrants;
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants;
- the date on which the right to exercise the warrants will commence, and
the date on which the right will expire; and
- the maximum or minimum number of the warrants which may be exercised at
any time.
EXERCISE OF WARRANTS
Each warrant will entitle the holder of the warrant to purchase for cash at
the exercise price set forth in the applicable prospectus supplement the
principal amount of debt securities or shares of preferred stock, common stock
or depositary shares being offered. Holders may exercise warrants at any time up
to the close of business on the expiration date set forth in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants are void.
Holders may exercise warrants as set forth in the prospectus supplement
relating to the warrants being offered. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the prospectus supplement,
we will, as soon as practicable, forward the debt securities, depositary shares
or shares of preferred stock or common stock purchasable upon the exercise. If
less than all of the warrants represented by the warrant certificate are
exercised, we will issue a new warrant certificate for the remaining warrants.
PLAN OF DISTRIBUTION
We may sell the securities:
- directly to purchasers;
- through agents;
- through dealers;
- through underwriters; or
- through a combination of any of the foregoing methods of sale.
We may distribute the securities from time to time in one or more
transactions at:
- a fixed price or prices, which may be changed;
- market prices prevailing at the time of sale;
- prices related to such prevailing market prices; or
- negotiated prices.
We may solicit directly offers to purchase the securities being offered
pursuant to this prospectus. We may also designate agents to solicit offers to
purchase the securities from time to time. We will name in a prospectus
supplement any agent involved in the offer or sale of our securities.
If we utilize a dealer in the sale of the securities being offered pursuant
to this prospectus, we will sell the securities to the dealer, as principal. The
dealer may then resell the securities to the public at varying prices to be
determined by the dealer at the time of resale.
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If we utilize an underwriter in the sale of the securities being offered
pursuant to this prospectus, we will execute an underwriting agreement with the
underwriter at the time of sale and we will set forth the name of any
underwriter in the prospectus supplement which the underwriter will use to make
resales of the securities to the public. In connection with the sale of the
securities, we, or the purchasers of securities for whom the underwriter may act
as agent, may compensate the underwriter in the form of underwriting discounts
or commissions. The underwriter may sell the securities to or through dealers,
and the underwriter may compensate those dealers in the form of discounts,
concessions or commissions.
We will describe in the applicable prospectus supplement any compensation we
pay to underwriters, dealers or agents in connection with the offering of the
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Dealers and agents participating in the
distribution of the securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the debt securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers and
agents against certain civil liabilities, including liabilities under the
Securities Act, or to contribute to payments they may be required to make in
respect thereof.
If we so specify in the applicable prospectus supplement, we will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase the securities pursuant to contracts providing for payment and delivery
on future dates. The institutions with which the contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others. The purchaser's
obligations under the contracts will not be subject to any conditions except
that:
- the purchase of the securities will not at the time of delivery be
prohibited under the laws of the jurisdiction to which the purchaser is
subject; and
- if the securities are also being sold to underwriters, we will have sold
to the underwriters the securities not sold for delayed delivery.
The underwriters, dealers and agents will not be responsible for the
validity or performance of the contracts. We will set forth in the prospectus
supplement relating to the contracts the price to be paid for the securities,
the commissions payable for solicitation of the contracts and the date in the
future for delivery of the securities.
The underwriters, dealers and agents may engage in transactions with us, or
perform services for us, in the ordinary course of business.
LEGAL MATTERS
Latham & Watkins, Los Angeles, California, will pass upon the validity of
the securities being offered pursuant to this prospectus.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
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$400,000,000
[LOGO]
8.875% SENIOR SUBORDINATED NOTES DUE 2008
PROSPECTUS SUPPLEMENT
LEAD MANAGER
JOINT BOOK RUNNING MANAGER
DEUTSCHE BANC ALEX. BROWN
CO-LEAD MANAGER
JOINT BOOK RUNNING MANAGER
MERRILL LYNCH & CO.
CO-LEAD MANAGER
BANC OF AMERICA SECURITIES
LLC
BNY CAPITAL MARKETS, INC.
COMMERZBANK CAPITAL MARKETS CORP.
FIRST UNION SECURITIES, INC.
SCOTIA CAPITAL
SG COWEN
FLEET SECURITIES, INC.
BEAR, STEARNS & CO. INC.
WASSERSTEIN PERELLA
SECURITIES, INC.
SEPTEMBER 12, 2000
