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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
AUGUST 30, 1995
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(Date of Report)
DEBBIE REYNOLDS HOTEL & CASINO, INC.
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(Exact Name of Registrant as specified in its charter)
NEVADA
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(State or other jurisdiction of incorporation)
O-18864 88-0335924
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(Commission File Number) (IRS Employer Identification Number)
305 CONVENTION CENTER DRIVE, LAS VEGAS, NEVADA 89109
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(Address of principal executive offices including zip code)
(702) 734-0711
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(Registrant's telephone number including area code)
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Debbie Reynolds Hotel & Casino, Inc. (the "Registrant") has entered into a
letter agreement with Bennett Funding International, Ltd. ("Bennett") dated
August 23, 1995, under which Bennett has agreed to provide the Registrant with a
$2,000,000 loan (the "Bennett Loan"). The loan is to be used by the Registrant
to pay certain promissory notes which are currently in default and various
delinquent accounts payable and other liabilities. As of the date hereof,
$450,000 of the Bennett Loan has been received by the Registrant. The Bennett
Loan bears interest at the rate of 14% per annum, interest only to be paid
monthly for the first 12 months of the loan. After the first 12 months,
principal and interest payments, amortized over 36 months, will be paid monthly,
or at Bennett's option, such payments will be based on a timeshare release
formula to be determined. As additional consideration for the loan, Bennett
will receive a $50,000 fee payable in monthly installments of $5,000 per month
for 10 months beginning January 1, 1996.
In connection with the Bennett Loan, Bennett has agreed to arrange a
$3,000,000 credit line facility for expansion of the Registrant's casino
facilities through Pegasus Entertainment & Funding Corporation ("Pegasus").
The Registrant has entered into a letter agreement with Pegasus for the
$3,000,000 credit facility, subject to Pegasus's due diligence review of the
Registrant's property and its financial condition, and approval by Pegasus's
Board of Directors. The credit line would bear interest at the rate of 14% per
annum with monthly interest only payments due for the first 12 months or until
the expansion of the casino facilities has been completed, whichever is earlier.
After such time, principal and interest payments, amortized over 48 months,
would be paid monthly. If the Registrant declines to accept the credit line,
the letter agreement provides for payments to Pegasus of (i) $4,000 per month
for 36 months if Pegasus has not at that time been approved for a gaming license
for the Registrant's casino facilities, or (ii) 2% of the casino's gross gaming
revenue when and if Pegasus is approved for such license. In addition, Pegasus
would have the right, under certain conditions, to convert up to 50% of its line
of credit into an interest in the casino's gross gaming revenue. Under the
letter agreement the Registrant would have certain buyout rights with respect to
the line of credit and Pegasus's interest in the casino's gross gaming revenue
after 12 months of operation of the casino by the Registrant. Due to the
various conditions of the letter agreement, there can be no assurance that the
Registrant will obtain the credit line. In addition, there can be no assurance
that the Registrant or Pegasus will be successful in obtaining a gaming license
for the casino. Currently, the Registrant's casino is owned and operated by
Jackpot Enterprises, Inc., a Nevada gaming licensee, through a lease agreement
with the Registrant.
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Bennett previously has provided the Registrant with significant financing
during the last year, including currently a first mortgage on the Debbie
Reynolds Hotel and other loans totalling approximately $3,220,000 and timeshare
financing of approximately $3,160,000.
Recently Michael Bennett, Deputy Chief Executive Officer of Bennett, has
resigned as a director of the Registrant.
In addition, Michael Weiner has resigned as a director of the Registrant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
29.1 Letter Agreement between the Registrant and Bennett Funding
International, Ltd. dated August 23, 1995.
29.2 Letter Agreement between the Registrant and Pegasus
Entertainment & Funding Corporation dated August 25, 1995.
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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.
DEBBIE REYNOLDS HOTEL & CASINO,
INC.
Date: August 30, 1995 By:/s/ Todd Fisher
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Todd Fisher,
Chief Executive Officer
Form 8-K.6
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BENNETT FUNDING INTERNATIONAL, LTD.
Two Clinton Square
Syracuse, NY 13202
August 23, 1995
Mr. Todd Fisher
Debbie Reynolds Hotel & Casino
305 Convention Center Drive
Las Vegas, NV 89109
Dear Todd:
Set forth herein is a proposal by Bennett Funding International, Ltd.
("BFIL") to Debbie Reynolds Hotel & Casino ("DRHC") relative to providing
financing to stabilize accounts payable and repay certain debt and arrange for a
gaming finance company to supply a credit line to expand the existing casino
property.
As background, a Bennett company ("Bennett") currently has a first mortgage
of approximately $1,800,000 and has provided approximately $865,000 in
additional loans up to 6/2/95. In addition, Bennett has provided $250,000 to
DRHC on 7/27/95 and $50,000 to DRHC on 8/11/95 collateralized by equipment
leases.
DRHC is in need of funding to payoff a balloon portion of the second
mortgage (approximately $500,000) and to repay the fourth mortgage which is
approximately $275,000. In addition, DRHC has approximately $1,300,000 in
accounts payable for which a loan will be required to develop a repayment plan
to maintain creditor relations.
With the above information as background, BFIL would make the following
proposal to DRHC:
1). BFIL would provide DRHC with a $2,000,000 loan ($300,000 which has
previously been provided) as follows:
a). All remaining draws would be used to repay the balloon second
mortgage (approximately $500,000), the fourth mortgage
(approximately $275,000) and selected accounts payable and taxes
as agreed upon mutually by DRHC and BFIL.
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Mr. Todd Fisher
August 23, 1995
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BFIL acknowledges the fact that DRHC currently owes property and
other taxes and is currently not receiving any proceeds from
timeshare funding until these taxes totaling approximately
$250,000 are paid. BFIL agrees to work with DRHC pertaining to
use of proceeds during this period provided the mortgages
previously discussed are taken out as part of the plan.
b). The loan draw amounts would be:
$250,000 on 7/27/95 (previously furnished in the form of a lease)
$50,000 on 8/11/95 (previously provided in the form of a lease)
$150,000 during the week beginning 8/21/95
$75,000 during the week beginning 8/28/95
$75,000 during the week beginning 9/4/95
$150,000 during the week beginning 9/11/95
$250,000 during the week beginning 9/18/95
$250,000 during the week beginning 9/25/95
$250,000 during the week beginning 10/2/95
$250,000 during the week beginning 10/9/95
$250,000 during the week beginning 10/16/95
c). BFIL would continue to maintain as collateral the second deed of
trust on the property owned by Debbie Reynolds in Beverly Hills
and a security interest on $785,000 of equipment. The equipment
was purchased by DRHC and a sale lease back was completed through
a Bennett entity. Further, DRHC would provide an immediate fifth
mortgage for BFIL and obtain the appropriate approvals from other
debt holders if necessary. DRHC would provide proof of this
permission prior to receiving further advances under this loan
from BFIL.
DRHC would also provide a use of proceeds schedule for the loan
proceeds which would include the repayment of the second mortgage
balloon and the fourth mortgage as approved by these lenders.
After the fourth mortgage has been taken out, BFIL would be given
a fourth mortgage to incorporate this $2,000,000 loan, the
$525,000 loaned on 2/2/95, the $200,000 loaned on 5/5/95 and the
$140,000 loaned on 6/2/95.
DRHC and BFIL further agree that all of the loans incorporated in
a fourth mortgage as discussed in the previously paragraph would
be combined with
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Mr. Todd Fisher
August 23, 1995
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the existing first mortgage after the second and third mortgage
is repaid in fall. If either the second or third mortgage was
repaid in full, DRHC would provide a third mortgage to BFIL. DRHC
agrees to cooperate with all filings in order to accomplish this
and further represents and warrants that it will not permit any
new lenders to have a position on the DRHC real estate without
the permission of BFIL.
At the point that all of the BFIL loan amounts are rolled into a
first mortgage on the DRHC property, BFIL would release the
second deed of trust on the property owned by Debbie Reynolds in
Beverly Hills and the equipment collateralizing the equipment
lease.
d). The $2,000,000 would bear interest only for the initial 12 months
from 7/27/95 until 7/26/96 at an interest rate of 14% per annum
paid monthly. The repayment would then be made on a 36 month
equal amortization of interest and principal at 14% per annum or
through a timeshare release price mechanism at BFIL's option.
e). As a requirement of the loan, DRHC represents and warrants that
it can obtain sufficient financing to fund working capital
requirements such as payroll, general operating expenses,
timeshare related expenses, etc. BFIL would require a letter
from DRHC signed by an officer and approved by the board which
indicates that DRHC has the capability to raise up to $500,000 to
fund working capital requirements if necessary.
f). As an additional incentive for BFIL to enter into this $2,000,000
loan BFIL is entitled to a fee of $50,000 payable in monthly
installments of $5,000 per month for 10 months with the first
payment due and payable on 1/1/96 and the first of each month
thereafter.
2). BFIL has agreed to arrange a $3,000,000 credit line facility for
casino expansion through Pegasus Entertainment & Funding Corporation.
("Casino Loan") Pegasus would have sole responsibility for
compensating BFIL under this arrangement.
Since this compensation would be additional consideration for BFIL in
making the original $2,000,000 loan, DRHC agrees to be bound by the
terms of the Casino Loan as evidenced separately in an agreement
between Pegasus and DRHC.
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Mr. Todd Fisher
August 23, 1995
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3). This agreement is assignable by BFIL with the permission of DRHC which
would not be unreasonably withheld.
Todd, if this meets with your approval, please indicate by signing and
returning to my attention as soon as possible.
Best regards,
BENNETT FUNDING INTERNATIONAL, LTD.
/s/ Michael A. Bennett
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MICHAEL A. BENNETT
Chief Executive Officer
MAB/ld
AGREED TO AND ACCEPTED BY:
DEBBIE REYNOLDS HOTEL & CASINO
BY:/s/ Todd Fisher
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TITLE: CEO
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DATE: 8-25-95
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PEGASUS ENTERTAINMENT & FUNDING CORPORATION
Two Clinton Square - Syracuse, NY 13202
August 25, 1995
Mr. Todd Fisher
Debbie Reynolds Hotel & Casino
305 Convention Center Drive
Las Vegas, NV 89109
RE: $3,000,000 CREDIT LINE FOR CASINO EXPANSION
Dear Todd:
We are prepared to offer Debbie Reynolds Hotel & Casino ("DRHC") a
$3,000,000 credit line to expand the casino operations ("Casino Loan") subject
to the following:
1). A complete review and due diligence on the DRHC property and
financial condition at no cost to DRHC.
2). Approval by the Pegasus Board of Directors.
DRHC and Pegasus agree to be governed by the following terms and
conditions pertaining to this loan:
a). If Pegasus does not agree to provide this loan within six months
from the date of this agreement, DRHC would have no
responsibility to proceed with Pegasus or this loan and would not
be required to compensate Pegasus for this credit line.
b). If Pegasus agrees to provide this credit line to DRHC as
evidenced in writing, DRHC has the following options:
i. If DRHC decides not to accept the loan from Pegasus, Pegasus
would receive $4,000 per month for a 36 month period from
the date of the letter evidencing our intentions to proceed
from DRHC prior to Pegasus being found suitable for a gaming
license relative to the DRHC property.
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Mr. Todd Fisher
August 25, 1995
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Notwithstanding this $4,000 payment, DRHC agrees to assist
with the process of obtaining a gaming license at the DRHC
property. After Pegasus is found suitable, Pegasus would be
entitled to 2% of gross gaming revenue without deductions
("Gross Gaming Revenue") and the $4,000 per month fee would
be null and void.
Notwithstanding the fees or percentage of Gross Gaming
Revenue as set forth above, DRHC would have the right to
buyout this on-going compensation structure by paying
Pegasus an amount equal to the highest months Gross Gaming
Revenue times 12 times 2 times .02. This right would occur
no sooner than after 12 complete months of casino operation
whereby DRHC was the licensed owner of the casino.
DRHC's right to this buyout is conditioned on having made
all payments under this section on a current basis. If any
payments are owed or late under this section, the buyout
option would be null and void.
ii. If DRHC agrees to accept the credit line the loan terms
would be as follows:
a). The loan would bear interest at 14% per annum with
interest only due until the expansion was complete or
12 months from the day of the initial draw, whichever
is earlier with payments paid monthly. The loan would
then amortize with equal principal and interest
payments over 48 months at 14% per annum, with payments
paid monthly.
b). If Pegasus were found suitable for a gaming license
relative to the DRHC property, any time within the
initial 36 months of the granting of the first draw of
the casino loan, Pegasus could convert, at its option,
up to 50% of the casino loan into an interest in 7% of
Gross Gaming Revenue in the DRHC casino provided that
the entire $1,500,000 was converted. Pegasus would
also have the option of converting a portion of the
loan less than the 50% into a share of Gross Gaming
Revenue at the DRHC casino with a relationship
identical to converting $1,500,000 in loans to 7% of
Gross Gaming Revenue.
c). Notwithstanding what is set forth under b.ii., if DRHC
desires an expansion of the casino beyond the initial
scope of the $3,000,000 casino credit line, DRHC would
have the option of reducing Pegasus'
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Mr. Todd Fisher
August 25, 1995
-Page 3 of 3-
interest in the Gross Gaming Revenue of the casino
operations to 3.5% by repaying the full equity portion
of Pegasus' loan in a lump sum basis within three years
of the date of this agreement.
Additionally, DRHC would have the option of taking out
Pegasus completely by repaying the equity portion in a
lump sum as discussed previously and by paying Pegasus
six times the annualized Gross Gaming Revenue times
.04. This option to remove the 3.5% of Gross Gaming
Revenue is only exercisable after the expansion of the
casino has been completed and a casino has been in full
operation for 12 full months.
c). This agreement is assignable by Pegasus with the
permission of DRHC which would not be unreasonably
withheld.
If the agreement as set forth meets with your approval, please indicate by
signing and returning to my attention as soon as possible.
Best regards,
PEGASUS ENTERTAINMENT
& FUNDING CORPORATION
/s/ Kevin J. Kuppel
KEVIN J. KUPPEL
Chief Executive Officer
KJK/id
AGREED AND ACCEPTED BY:
DEBBIE REYNOLDS HOTEL & CASINO
BY: /s/ Todd Fisher
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TITLE: CEO
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DATE: 8-25-95
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