<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
--------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 1996
----------------
Fair Grounds Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Louisiana 0-7607 72-0361770
- -------------------------------------------------------------------------------
(State or Other Juris- (Commission (IRS Employer
diction of Incorporation) File Number) Identification No.)
1751 Gentilly Boulevard, New Orleans, Louisiana 70119
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (504) 944-5515
--------------
Not Applicable
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 3 Pages
<PAGE> 2
ITEM 5. OTHER EVENTS.
As previously reported by Fair Grounds Corporation (the "Company"), one of the
impediments to the Company's ability to obtain long-term financing or other
sources of funds for the completion of construction of its new racing facility
has been the uncertainty in Louisiana concerning the future of the gaming
industry. The Company derives significant revenue from the operation of video
poker devices and, in addition, is authorized to utilize up to $2.5 million
annually from video poker franchise fees to facilitate the rebuilding of its
racing facility.
In connection with the general elections held on November 5, 1996, special
elections were held in each parish in Louisiana to approve or disapprove, on a
parish-by-parish basis, video poker and other forms of gaming. In such local
elections, the voters in every parish in which the Company does business except
one approved of the operation of video poker devices. The one exception was
St. Tammany Parish, where the Company maintains two facilities; however, the
Company does not believe that the loss of video poker revenue from such
locations will have a material adverse effect on the Company's results of
operations or on the amount of video poker tax relief available annually to the
Company. In addition, notwithstanding the results of such local election in
St. Tammany Parish, the Company may continue to operate video poker devices in
St. Tammany Parish for 30 months after the date of the local referendum.
The Company also has previously reported that it had filed an action in the
24th Judicial Court in the State of Louisiana against Travelers Indemnity
Company of Illinois ("Travelers"), and others, arising out of the Company's
efforts to collect insurance proceeds following the December 1993 fire at the
Fair Grounds Race Course, and that such action was scheduled for trial in
November 1996. The Company has contended in such lawsuit that the insurance
policy provided by Travelers provided the Company with blanket coverage in the
amount of $24.1 million in excess of the $10 million of underlying coverage
provided by Allianz Underwriters Insurance Company and Royal Indemnity Company;
accordingly, the Company has asserted that Travelers is liable for the
difference between $24.1 million and the amount already paid (approximately
$9.3 million), plus statutory penalties of 10% of the amount not paid,
interest, attorney's fees and costs. The Company has further contended that
the insurance agent and the insurance broker who arranged for the insurance are
liable to the Company for any damages sustained including any damages sustained
if the amount of coverage is less than that claimed by the Company. Travelers
has asserted that the excess policy did not provide blanket coverage and that
its liability under such policy is limited to the amount which it has already
paid.
Page 2 of 3 Pages
<PAGE> 3
On November 18, 1996, the Company reached a settlement in such action with the
insurance agent and insurance broker. The settlement provides that the
settling defendants are to pay the Company $10 million in the aggregate within
six weeks from the date of settlement. In addition, each such settling
defendant will share with the Company, in accordance with an agreed-upon
formula, in any settlement with or award of damages against Travelers.
Also on November 18, 1996, the trial court denied Travelers' motion for summary
judgment, and at the same time granted leave to Travelers to appeal such denial
on an interlocutory basis. Trial of the action has been continued pending a
ruling from the Louisiana Fifth Circuit Court of Appeals on such appeal.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
FAIR GROUNDS CORPORATION
By:s/ Gordon Robertson
--------------------------------
Its: Vice President and CFO
---------------------------
Date: November 25, 1996
Page 3 of 3 Pages
