SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
DUNES HOTELS AND CASINOS, INC.
COMMON STOCK
AT $1.00 NET PER SHARE IN CASH AND
SERIES B, $7.50 CUMULATIVE PREFERRED STOCK
AT $30.00 NET PER SHARE IN CASH
BY
DUNES HOTELS AND CASINOS, INC.
This supplement amends and updates the information contain in the Offer to
Purchase dated October 31, 2000 relating to the offer by the Dunes Hotels and
Casinos, Inc. to purchase all of the outstanding shares of its common stock and
series B, $7.50 cumulative preferred stock. The date of this supplement is
December 21, 2000.
Extension of Offer. The Offer and Withdrawal Rights are hereby extended to
4:00 p.m. Central time, on February 15, 2001, unless the offer is further
extended in the future. If you have previously tendered your shares, you may
withdraw your tender at any time prior to February 15, 2001 by following the
procedures for withdrawal described in the Offer to Purchase under the caption
"The Offer--4. Withdrawal Rights". Payment for shares will be made promptly
after February 15, 2001 in accordance with the procedures described in the Offer
to Purchase under the caption "The Offer--2. Acceptance for Payment and
Payment".
Additional Telephone Number for Assistance. In addition to the telephone
number for assistance listed in the Offer to Purchase, General Financial
Services is making its (800) telephone number available to shareholders who have
questions and requests for assistance. You may contact Thomas Steele, the Dunes'
General Counsel, at 1-800-728-1029, Ext. 28.
Additional Offerors. You should consider the offer to purchase your shares
and all the information contained in the original Offer to Purchase and this
supplement to be jointly made by the Dunes Hotels and Casinos, Inc., General
Financial Services, Inc., GFS Acquisition Company, Inc. and Steve K. Miller. In
this supplement, the Dunes, General Financial Services, GFS Acquisition Company
and Mr. Miller are collectively referred to as the "offerors". Mr. Miller,
General Financial Services and GFS Acquisition Company are collectively referred
to as the "GFS Group". Mr. Miller is the sole shareholder and director and the
President of General Financial Services. General Financial Services is the sole
shareholder of GFS Acquisition Company and Mr. Miller is the sole director and
the President of GFS Acquisition Company. General Financial Services, either
directly or through GFS Acquisition Company, owns or controls approximately
76.2% of the common stock of the Dunes. See "The Offer--7. Certain Information
Concerning the Dunes" in the Offer to Purchase for additional information
concerning the GFS Group. The telephone number for the GFS Group is (316)
636-1070.
Summary Term Sheet. The answer in the summary term sheet to the question
"HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?" is revised as follows:
We are offering to pay $1.00 per share for the common stock and $30.00 per
share for the preferred stock, in each case, net to you in cash, without
interest. Although we believe these prices are above the current market
value of the shares, the price for the common stock is less than its
current net book value ($1.13 as of September 30, 2000) and the price for
the preferred stock is less than its liquidation value ($268 as of
September 30, 2000, including accrued and unpaid dividends of $143). If you
are the record owner of your shares and you tender your shares to us in the
Offer, you will not have to pay brokerage fees or commissions. If you own
your shares through a broker or other nominee, and your broker tenders your
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shares on your behalf, your broker or nominee may charge you a fee for
doing so. You should consult with your broker or nominee to determine
whether any charges will apply. See "INTRODUCTION".
Why are we making the offer at this time? As indicated in the Offer to
Purchase, the GFS Group acquired control of the Dunes in April 2000 and replaced
the prior board of directors with the current board of directors. The offerors
believe that the Dunes and its shareholders had suffered under the previous
board of directors as evidenced by the poor financial performance of the Dunes,
the failure to hold annual shareholder meetings during the past 15 years and the
absence of an active trading market for the Dunes' shares. After undertaking a
review of the Dunes' historical financial performance, current financial
condition and future business prospects, the offerors determined that it was
unlikely that an active trading market for the Dunes' shares would develop in
the near future. Based on the results of the foregoing review, the offerors
decided that the offer would provide shareholders the opportunity to realize the
current market value of their shares while at the same time allowing the Dunes
the opportunity to (1) eliminate the ongoing costs of being a public company
(which were estimated to be approximately $200,000 per year) and (2) reduce the
amount that would be owed to holders of the preferred shares in the event of a
liquidation of the Dunes.
Fairness of the Offer. You should interpret the discussion in the Offer to
Purchase regarding the fairness of the transaction to the shareholders of the
Dunes to be directed solely to the fairness of the transaction to the
unaffiliated shareholders of the Dunes. As discussed in the Offer to Purchase,
the affiliated shareholders of the Dunes have indicated to the board of
directors of the Dunes that they will not be tendering their shares in the
offer.
Since the Offer Price is below the net book value of the common stock and
below the liquidation preference of the preferred stock, the net book value of
the common stock owned by the GFS Group will be increased as a result of the
purchase of any shares tendered in the offer. If all of the Common Shares not
owned by the GFS Group were tendered in the offering, the net book value of the
Common Shares owned by the GFS Group would increase from $1.13 to $1.17. If all
of the Preferred Shares not owned by the GFS Group were tendered in the
offering, the net book value of the Common Shares owned by the GFS Group would
increase from $1.13 to $1.58. If all of the Common Shares and Preferred Shares
not owned by the GFS Group weere tendered in the offering, the net book value of
the Common Shares owned by the GFS Group would increase from $1.13 to $1.75. In
addition, since their percentage ownership in the Dunes will be increased as a
result of the purchase of any shares tendered in the offer, their share of any
future losses, profits, dividends or other distributions will also be increased.
The amount of any such increase will depend upon the number of shares tendered
in the offer. If you tender your shares in the offer, you will not be able to
participate in any future profits, dividends or other distributions of the
Dunes. However, the board of directors of the Dunes currently does not intend to
pay any dividends or make any other distributions on the capital stock of the
Dunes for the foreseeable future.
In determining the Offer Price for the preferred shares, the offerors first
determined that the Dunes is currently solvent. As a result, in the event of a
liquidation or sale of the Dunes, the holders of the preferred shares would be
entitled to receive the full amount of their liquidation preference, but no
more. The offerors, therefore, did not attempt to value the preferred shares
using net book value, liquidation value or going concern value, since those
methods would not change the amount that the preferred shareholders would
receive. The offerors did determine that the preferred shares had a fair value
less than its current liquidation value based on the factors discussed in
"Special Factors--2. Purpose and Fairness of the Offer" in the Offer to
Purchase.
Based on the foregoing discussion and the discussion in the Offer to
Purchase, the offerors believe that the entire transaction, including the
consideration to be paid to the shareholders, is fair to the unaffiliated
shareholders of the Dunes. The offerors also believe that the determination of
the offer price was procedurally fair to the shareholders despite the fact that:
o the Dunes has not retained and does not intend to retain any unaffiliated
representative to act solely on behalf of the unaffiliated shareholders for
purposes of negotiating the terms of the offer and/or preparing a report
concerning the fairness of the offer,
o the Dunes has not received any report, opinion or appraisal from an outside
party that is materially related to the offer, and
o the Dunes has not had the offer approved by a majority of the unaffiliated
shareholders of the Dunes.
The offerors did not view the absence of these procedural safeguards to be
material since, unlike in a two step tender offer with a cash-out merger after
the tender offer is completed, you will have the right to determine whether you
receive the offered consideration or remain a shareholder of the Dunes. The
offerors also believe that given the relatively small size of the Dunes, it
would have been difficult to find an experienced and knowledgeable individual to
prepare a report and/or represent the unaffiliated shareholders. The offerors
also believe that given the
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nature of the Dunes' assets, the Offer Price would not have been materially
different if such an individual had been retained. The offer was unanimously
approved by the Board of Directors of the Dunes, including the three
non-employee directors
See also "Special Considerations--4. Interests of Certain Persons in the
Offer" in the Offer to Purchase.
Conditions to the Offer. If we waive any conditions to the offer, we will
do so prior to the expiration of the offer. We hereby by delete the last
paragraph of "The Offer--8. Conditions to the Offer" in the Offer to Purchase.
Federal Income Tax Considerations. Your acceptance of the offer will not
have any tax consequences to the offerors.
Additional Financial Information. The financial statements contained in the
Dunes' Quarterly Report on Form 10-QSB filed with the Securities and Exchange
Commission on November 15, 2000 are incorporated herein by reference.
Forward Looking Statements. The forward looking statements contained in, or
incorporated by reference into, the Offer to Purchase are not subject to the
safe harbor provided by Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934.
Beneficial Ownership of Shares. As of the date of this supplement, the
offerors are not aware of any change in the information contained in the stock
ownership table contained in "Special Factors--Beneficial Ownership of the
Stock" in the Offer to Purchase.
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