SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1943
For the transition period from _______________________
to ____________________
Commission file number 0-14897
Players International, Inc.
Nevada 95-4175832
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
1300 Atlantic Ave., Suite 800 Atlantic City, NJ
08401
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code
(609) 449-7777
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the registrant's
classes of common stock was 31,916,748 shares at February 13,
1998.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1997
and March 31, 1997 1
Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended December 31, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended December 31, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
December 31, March 31,
1997 1997
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $24,274 $20,567
Accounts receivable, net of
allowance for doubtful accounts of
$664 at December 31, 1997 and
$1,028 at March 31, 1997 2,514 3,123
Notes receivable 1,500 19
Inventories 1,547 1,955
Deferred income tax 1,881 1,881
Income taxes refundable - 27,534
Prepaid expenses and other current
assets 2,217 3,997
Assets held for sale - 8,500
Total current assets 33,933 67,576
PROPERTY AND EQUIPMENT, net of
accumulated depreciation
and amortization of $40,149 at
December 31, 1997 and
$27,336 at March 31, 1997 219,229 210,442
DEFERRED INCOME TAX - long-term 4,654 4,654
INTANGIBLES, net of accumulated
amortization of $3,327 at December 31,
1997 and $2,541 at March 31, 1997 35,547 36,271
INVESTMENT IN JOINT VENTURE 99,139 95,401
OTHER ASSETS 5,749 6,945
TOTAL ASSETS $398,251 $421,289
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value)
LIABILITIES AND STOCKHOLDERS' EQUITY
December March
31, 31,
1997 1997
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt $31,948 $8,500
Accounts payable 4,129 6,466
Accrued liabilities 20,846 33,969
Other liabilities 5,330 2,921
Total current liabilities 62,253 51,856
OTHER LONG-TERM LIABILITIES 26,453 26,052
LONG-TERM DEBT, net of current portion 151,065 187,500
STOCKHOLDERS' EQUITY:
Preferred stock, no par value,
Authorized- 10,000,000 shares,
Issued- none - -
Common stock, $.005 par value,
Authorized- 90,000,000 shares,
Issued- 32,585,848 at December
31, 1997 and 32,563,348
at March 31, 1997 163 163
Additional paid-in capital 132,276 132,256
Treasury stock, at cost; 672,100
shares at December 31, 1997 and
March 31, 1997 (7,294) (7,294)
Retained earnings 33,335 30,756
Total stockholders' equity 158,480 155,881
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 398,251 $421,289
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
For the For the
Three Months Nine Months
Ended Ended
December 31, December 31,
1997 1996 1997 1996
REVENUES:
Casino 72,224 58,105 226,390 197,617
Food and beverage 2,342 3,195 9,301 10,604
Hotel 159 1,491 2,182 5,069
Other 1,241 2,057 4,835 5,576
75,966 64,848 242,708 218,866
COSTS AND EXPENSES:
Casino 34,144 28,270 106,035 89,951
Food and beverage 2,085 3,329 8,391 10,782
Hotel 177 690 1,013 2,320
Other operating expenses 9,791 8,834 31,793 27,955
Selling, general and 14,492 13,238 44,392 41,740
administrative
Corporate administrative 2,095 2,263 5,389 7,325
expenses
Allocated amounts of 2,484 - 8,917 -
joint venture
Pre-opening and gaming - 1,660 - 4,954
development costs
Depreciation and 5,016 7,717 14,951 17,099
amortization
Restructuring charge - - - 9,007
70,284 66,001 220,881 211,133
Income (loss) before
other income (expense)
and provision (benefit)
for income taxes 5,682 (1,153) 21,827 7,733
OTHER INCOME (EXPENSE):
Interest income 177 27 414 194
Other income, net 18 11 - 76
Interest expense (5,633) (3,975) (18,026)(11,587)
(5,438) (3,937) (17,612)(11,317)
Income (loss) before
provision (benefit) for
income taxes 244 (5,090) 4,215 (3,584)
PROVISION (BENEFIT) FOR
INCOME TAXES 78 (1,985) 1,636 (1,398)
NET INCOME (LOSS) $166 $(3,105) $2,579 $(2,186)
EARNINGS (LOSS) PER COMMON
SHARE
Basic and Diluted $0.01 $(0.11) $0.08 $(0.07)
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
For the Nine
Months Ended
December 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,579 $(2,186)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 14,951 17,099
Joint venture depreciation and
amortization 3,359 -
Loss on disposition of property and
equipment 111 1,957
Other 326 618
Changes in assets and liabilities:
Accounts and notes receivable (1,196) 2,140
Inventories, prepaid expenses and
other current assets 2,188 (4,026)
Income taxes refundable 28,965 -
Other assets 201 1,096
Accounts payable and accrued
liabilities (15,460) (15,961)
Other liabilities 672 9,500
Net cash provided by operating
activities 36,696 10,237
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment(18,191) (33,626)
Proceeds from disposal of property and
equipment 8,794 8,749
Proceeds from sale of marketable
securities - 4,401
Investment in joint venture (6,390) (42,800)
Other - (329)
Net cash used in investing activities (15,787) (63,605)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
debt 27,000 52,500
Repayments of long-term debt (43,891) (5,500)
Debt issuance cost (331) (1,963)
Proceeds from exercise of stock options
and warrants 20 5,599
Other - (48)
Net cash provided by (used in)
financing activities (17,202) 50,588
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,707 (2,780)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20,567 18,786
CASH AND CASH EQUIVALENTS AT END OF PERIOD $24,274 $16,006
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $22,210 $20,400
Income taxes paid 9 4,127
Debt incurred to purchase equipment 3,905 -
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations. It is suggested that
these condensed consolidated financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Company's Form 10-K for the year ended March 31,
1997. In the opinion of management, all adjustments (which
include normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows of
all periods presented have been made.
The results of operations for the three and nine months
ended December 31, 1997, are not necessarily indicative of the
operating results for the full year.
Certain reclassifications have been made to the financial
statements as previously presented to conform to current
classifications.
Note 2 - Casino Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses.
Revenues exclude the retail value of complimentary food and
beverage, hotel accommodations and other items furnished to
customers, which totaled approximately $5,605,000 and $6,634,000
and $17,719,000 and $20,251,000 for the three and nine months
ended December 31, 1997 and 1996, respectively.
The estimated cost of providing such complimentary services
are included in casino costs and expenses through inter-
department allocations from the department granting the services
as follows (dollars in thousands):
For the Three For the Nine
Months Months
Ended Ended
December 31, December 31,
1997 1996 1997 1996
Food and beverage $4,138 $4,854 $13,140 $15,922
Hotel 59 371 351 897
Admissions and other 169 439 617 1,094
$4,366 $5,664 $14,108 $17,913
Note 3 - Earnings Per Share
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards, No. 128,
("SFAS 128") Earnings per Share, which is required to be adopted
for the quarter ended December 31, 1997. Under the new
requirements for calculating basic earnings per share, the
dilutive effect of stock options are excluded.
The following table illustrates the computation of basic and
diluted earnings per share:
For the For the Nine
Three Months Months Ended
December 31, December 31,
<TABLE>
1997 1996 1997 1996
Numerator:
<S> <C> <C> <C> <C> <C>
Net income (loss) $166,000 $(3,105,000) $2,579,000 $(2,186,000)
Denominator:
Denominator for basic
earnings per share-
weighted-average shares 31,913,748 29,380,359 31,899,266 29,252,007
Effect of dilutive
securities-stock options 22,497 - 21,082 -
Denominator for diluted
earnings per share-
adjusted weighted- 31,936,245 29,380,359 31,920,348 29,252,007
average shares
Basic earnings per share $0.01 $(0.11) $0.08 $(0.07)
Diluted earnings per
share $0.01 $(0.11) $0.08 $(0.07)
</TABLE>
Note 4 - Long-Term Debt
Long term debt at December 31, 1997 consisted of the
following (dollars in thousands):
Senior notes, interest at 10-7/8%
payable semi-annually on April 15 and
October 15, due 2005 $150,000
Note payable under a revised
reducing revolving credit
agreement (the
"Revised Credit Facility") 30,000
Note payable, secured by slot machines
interest at 12% due June 23, 1999 3,013
183,013
Less current portion (31,948)
$ 151,065
In December, 1997, the Company amended its existing bank
Credit Agreement to permit the acquisition of the Lake Charles
Holiday Inn and to modify its interest rate and repayment terms.
The amendment fixed the interest rate at 2.5% above the bank's
prime rate commencing October 1, 1997, and fixed the maximum
amount of borrowing available under the Credit Facility at $50
million from December 31, 1997, until the expiration of the
Credit Agreement on June 30, 1998.
The Company is currently discussing the replacement of the
existing bank facility with a number of lending sources,
including its current bank group. The Company anticipates
finalizing new definitive financing arrangements by March 31,
1998.
Note 5 - Allocated Amounts of Joint Venture
The Company owns a 50% interest in a casino entertainment
facility in Maryland Heights, Missouri (the "Joint Venture")
which opened on March 11, 1997. The investment in the Joint
Venture is accounted for using the equity method of accounting.
Summary condensed financial information for the Joint
Venture is as follows (dollars in thousands):
For the Three For the Nine
Months Months
Ended December 31, Ended December 31,
1997 1996 1997 1996
Net revenues $4,496 $- $13,820 $-
Depreciation and
amortization 1,498 - 6,718 -
Net loss 4,968 - 17,834 -
Note 6 - Restructuring Charge
During the quarter ended September 30, 1996, the Company
decided to significantly reduce its pursuit of development
opportunities in new or emerging jurisdictions and instead
concentrate on improving its existing operations. This resulted
in the sale of a non-operating riverboat held for future
deployment and a corporate aircraft, the closure of two
development offices and the retirement or termination of 21
senior management and staff. The affected employees included
those specifically responsible for the Company's developmental
activities and others necessitated to effect the Company's
revised business plan. The one-time charge of $9,007,000
consists principally of the net loss on the disposal of assets
held for or used in development activities and the cost of
employee severance arrangements.
Note 7 - Contingencies
The Company is involved in certain litigation regarding the
constitutionality of gaming facilities (such as the Maryland
Heights Facility) located upon artificial basins fed by the
Missouri River. At this time, based on discussions with Missouri
legal counsel, management believes that any potential problem
could be remedied through (i) a public referendum at the November
1998 Missouri election, in order to cure any ambiguity or
uncertainty in the law or (ii) the defenses available to the
Company if a lawsuit or administrative action based on this
ruling were to be brought or (iii) remedial action to the
property. Due to the uncertainties, the Company cannot provide
any assurance that there will not be a material adverse impact
from the litigation and related developments.
Each cruising riverboat is regulated by the U.S. Coast
Guard. U.S. Coast Guard regulations require that hulls of
vessels of the type being operated by the Company in Lake Charles
and Metropolis to be inspected every five years at a U.S. Coast
Guard approved dry docking facility, which will cause a temporary
loss of service that could last one month or longer, unless the
U.S. Coast Guard determines that an alternative to dry docking is
acceptable. The next such inspection is scheduled to occur in
the fall of 1998 for the Lake Charles Star Riverboat, the fall of
2000 for the Players Lake Charles Riverboat and the fall of 2000
for the Metropolis Riverboat. The Company is pursuing, as an
alternative to dry docking, an underwater onsite inspection of
the hull of the Lake Charles Star Riverboat, subject to U.S.
Coast Guard approval. An underwater hull inspection would likely
involve a minimal disruption in operations, however, no assurance
can be given that dry docking and the related loss of service
will not be required.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Comparison of Operating Results for the Three-Month Periods Ended
December 31, 1997 and 1996
The Company owns and operates riverboat gaming and
entertainment facilities. These include one riverboat casino in
Metropolis, Illinois (the "Metropolis Facility"), two riverboat
casinos in Lake Charles, Louisiana (the "Lake Charles Facility")
and two contiguous, permanently moored, dockside riverboat
casinos in Maryland Heights, Missouri (the "Maryland Heights
Facility"). The Company operated a land-based casino resort in
Mesquite, Nevada (the "Mesquite Facility") until June 30, 1997.
The Company also owns and operates a racetrack in Paducah,
Kentucky. The Company's fiscal year ends on March 31st.
References to the third quarter of 1998 or 1997, mean the three
month periods ended December 31, 1997, and December 31, 1996,
respectively.
Results of Operations
Financial Highlights
%Increase/
Three months ended December 31, 1997 1996 (Decrease)
(Dollars in thousands, except per share amounts)
Casino Revenues
Metropolis $ 19,118 $ 18,976 0.7
Lake Charles 36,056 33,341 8.1
Maryland Heights 17,050 - -
Mesquite - 5,788 -
$ 72,224 $ 58,105 24.3
Total Revenues
Metropolis $ 19,846 $ 19,847 -
Lake Charles 37,761 35,023 7.8
Maryland Heights 18,086 - -
Mesquite - 9,546 -
Other 273 432 (36.8)
$ 75,966 $ 64,848 17.1
Operating Income (Loss)
Metropolis $ 4,259 $ 5,803 (26.6)
Lake Charles 5,184 2,857 81.4
Maryland Heights (a) (714) - -
Mesquite - (2,323) -
Corporate, development,
pre-opening and other (3,047) (7,490) 59.3
$ 5,682 $ (1,153) 592.8
Depreciation and
amortization (b) $5,765 $7,717 (25.3)
Interest expense 5,633 3,975 41.7
Net income (loss) 166 (3,105) 105.3
Earnings (loss) per
share assuming dilution $0.01 $(0.11) 109.1
Operating Margin (operating
income/total revenues)
Metropolis 21.5% 29.2% (7.7)pts
Lake Charles 13.7% 8.2% 5.5 pts
Maryland Heights (3.9)% - -
Consolidated 7.5% (1.8)% 9.3 pts
(a) Amount includes the Company's 50% share of both the Maryland
Heights Joint Venture operating losses and the Maryland Heights
Joint Venture depreciation and amortization. In the third
quarter of 1998, the total loss from investment in the Maryland
Heights Joint Venture was approximately $2.5 million.
(b) Third quarter of 1998 amount includes the Company's 50%
share of the Maryland Heights Joint Venture depreciation and
amortization of $749,000.
The 24.3% and 17.1% net increases in casino and total
revenues, respectively, in the third quarter of 1998 as compared
to the third quarter of 1997, resulted from the opening, on March
11, 1997, of the Company's Maryland Heights Facility and revenue
growth at the Company's Lake Charles Facility. Revenues from the
new Maryland Heights Facility more than offset the absence of any
revenues from Mesquite after the sale of the facility on June 30,
1997. In Lake Charles, casino revenue and total revenue
increased by 8.1% and 7.8%, respectively, compared to the third
quarter of the prior year as the market absorbed the increase in
competitive capacity created by the opening of a fourth riverboat
in July 1996.
The Company's operating income increased $6.8 million during
the third quarter of 1998 as compared to the third quarter of
1997. The increase was due to significantly better results at
the Lake Charles Facility for the third quarter of 1998 as
compared to the prior year's third quarter, a significant
reduction in corporate, development, pre-opening and other
expenses between the comparable periods, and the absence of an
operating loss at Mesquite in the third quarter of 1998.
Corporate, development, pre-opening and other expenses,
decreased by 59.3% as a result of the opening of Maryland Heights
on March 11, 1997, the cessation of development activities, and
the restructuring of corporate staff during the second half of
fiscal 1997.
Depreciation and amortization expense decreased 25.3% in the
third quarter of 1998 as compared to the third quarter of 1997
due to the absence of a $2.7 million write-off of unamortized
loan acquisition costs relating to the Company's bank credit
agreement (the "Credit Agreement") which was taken during the
third quarter of 1997. Depreciation during the third quarter of
1998 for Maryland Heights and the Maryland Heights Joint Venture
was partially offset by the absence of Mesquite depreciation in
the third quarter of 1998 .
Other Factors Affecting Net Income
Interest expense increased 41.7% in the third quarter of
1998 as compared to the third quarter of 1997 due to additional
borrowings to complete the Maryland Heights Facility, an increase
in the Company's average borrowing rate, and a $1.7 million
decrease in the amount of interest that was capitalized prior to
the opening of the Maryland Heights Facility. The interest rate
increase resulted from amendments to the Company's Credit
Agreement in December of 1996.
Comparison of Operating Results for the Nine-Month Periods Ended
December 31, 1997 and 1996
References to the first nine months of 1998 or 1997, mean
the nine month periods ended December 31, 1997 and December 31,
1996, respectively.
Results of Operations
Financial Highlights
%Increase/
Nine months ended December 31, 1997 1996 (Decrease)
(Dollars in thousands, except per share amounts)
Casino Revenues
Metropolis $ 58,875 $ 58,513 0.6
Lake Charles 113,314 122,096 (7.2)
Maryland Heights 49,763 - -
Mesquite 4,438 17,008 (c)
$226,390 $197,617 14.6
Total Revenues
Metropolis $ 61,266 $ 61,033 0.4
Lake Charles 118,749 128,398 (7.5)
Maryland Heights 53,306 - -
Mesquite 8,700 28,356 (c)
Other 687 1,079 (36.3)
$242,708 $218,866 10.9
Operating Income (Loss)
Metropolis $ 15,187 $ 17,652 (14.0)
Lake Charles 19,275 21,342 (9.7)
Maryland Heights (a) (4,146) - -
Mesquite (128) (5,423) (c)
Corporate, development,
pre-opening and other (8,361) (16,831) 50.3
Restructuring charge - (9,007) -
$ 21,827 $ 7,733 182.3
Depreciation and
amortization (b) $ 18,310 $17,099 7.1
Interest expense 18,026 11,587 55.6
Net income (loss) 2,579 (2,186) 218.0
Earnings (loss) per
share assuming dilution $ 0.08 $ (0.07) 214.3
Operating Margin (operating
income/total revenues)
Metropolis 24.8% 28.9% (4.1)pts
Lake Charles 16.2% 16.6% (0.4)pts
Maryland Heights (7.8)% - -
Consolidated 9.0% 3.5% 5.5 pts
(a) Amount includes the Company's 50% share of both the Maryland
Heights Joint Venture operating losses and the Maryland Heights
Joint Venture depreciation and amortization. In the first nine
months of 1998, the total loss from investment in the Maryland
Heights Joint Venture was approximately $8.9 million.
(b) First nine months of 1998 amount includes the Company's 50%
share of the Maryland Heights Joint Venture depreciation and
amortization of $3.4 million.
(c) The Mesquite Facility was sold on June 30, 1997, and
therefore does not appear in the Company's second and third
quarter 1998 financial results of operations.
The 14.6% and 10.9% net increases in casino and total
revenues, respectively, in the first nine months of 1998 as
compared to the first nine months of 1997, resulted from the
opening, on March 11, 1997, of the Company's Maryland Heights
Facility. Revenues from this new facility more than offset year
to year decreases in revenues at the Company's Lake Charles
Facility and the absence of any revenues from Mesquite after the
sale of the facility on June 30, 1997. In July of 1996, the
number of riverboats in the Lake Charles market increased from
three to four. As a result of the additional competitive
capacity, casino revenues and total revenues at the Lake Charles
Facility declined by 7.2% and 7.5%, respectively, as compared to
the first nine months of the prior year.
The sale of the Mesquite Facility was completed on June 30,
1997. The Company operated the facility under a sale-leaseback
agreement during the first quarter of fiscal 1998, but the
majority of Mesquite's assets were sold in March, 1997. The
remaining assets were classified as held for sale until June 30,
1997, when the sale was finalized.
The Company's operating income, excluding restructuring
charge, increased 30.4% during the first nine months of 1998 as
compared to the first nine months of 1997. This increase was
primarily attributable to a significant reduction in corporate,
development, pre-opening and other expenses between the
comparable periods and the absence of an operating loss at
Mesquite during the second and third quarters of 1998.
Corporate, development, pre-opening and other expenses,
decreased by 50.3% as a result of the opening of Maryland Heights
on March 11, 1997, the cessation of development activities, and
the restructuring of corporate staff during the second half of
fiscal 1997.
Depreciation and amortization expense increased 7.1% in the
first nine months of 1998 as compared to the first nine months of
1997 due to the depreciation from Maryland Heights and the
Maryland Heights Joint Venture which was partially offset by the
absence of Mesquite depreciation in the first nine months of 1998
and the absence of a $2.7 million write-off of unamortized loan
acquisition costs relating to the amendment and restatement of
the Company's Credit Agreement during the third quarter of 1997.
The restructuring charge reflected in the first nine months
of 1997 followed the Company's decision to significantly reduce
its pursuit of development opportunities in new or emerging
jurisdictions and instead concentrate on improving its existing
operations. This resulted in the sale of a non-operating
riverboat held for future deployment and a corporate aircraft,
the closure of two development offices and the retirement or
termination of 21 senior management and staff. The affected
employees included those specifically responsible for the
Company's developmental activities and others necessitated to
effect the Company's revised business plan. The one-time charge
of $9 million consists principally of the net loss on the
disposal of assets held or used in development activities and the
cost of employee severance arrangements.
Other Factors Affecting Net Income
Interest expense increased 55.6% in the first nine months of
1998 as compared to the first nine months of 1997 due to
additional borrowings to complete the Maryland Heights Facility,
an increase in the Company's average borrowing rate, and a $4.4
million decrease in the amount of interest that was capitalized
prior to the opening of the Maryland Heights Facility. The
interest rate increase resulted from amendments to the Company's
Credit Agreement in December of 1996.
Contingencies
The Company is involved in certain litigation regarding the
constitutionality of gaming facilities (such as the Maryland
Heights Facility) located upon artificial basins fed by the
Missouri River. See Part II, Item 1; W. Todd Akin, et al. v.
Missouri Gaming Commission.
Each cruising riverboat is regulated by the U.S. Coast
Guard. U.S. Coast Guard regulations require that hulls of
vessels of the type being operated by the Company in Lake Charles
and Metropolis to be inspected every five years at a U.S. Coast
Guard approved dry docking facility, which will cause a temporary
loss of service that could last one month or longer, unless the
U.S. Coast Guard determines that an alternative to dry docking is
acceptable. The next such inspection is scheduled to occur in
the fall of 1998 for the Lake Charles Star Riverboat, the fall of
2000 for the Players Lake Charles Riverboat and the fall of 2000
for the Metropolis Riverboat. The Company is pursuing, as an
alternative to dry docking, an underwater onsite inspection of
the hull of the Lake Charles Star Riverboat, subject to U.S.
Coast Guard approval. An underwater hull inspection would likely
involve a minimal disruption in operations, however, no assurance
can be given that dry docking and the related loss of service
will not be required.
Capital Resources and Liquidity
During the nine months ended December 31, 1997, cash
generated by operations, cash from the sale of Mesquite and the
associated tax refund, net bank borrowings, and equipment
financing were the sources of funds for investments in Maryland
Heights and the construction of the new dining and entertainment
complex in Metropolis. In July of 1997, the Company received
approximately $7 million in cash from the completion of the sale
of the Mesquite Facility and $23.8 million from a Federal income
tax refund for the fiscal year ended March 31, 1997.
Construction of the Maryland Heights Facility at a total
cost of $141 million was completed in the first quarter of fiscal
1998. Construction of the new Metropolis dining and
entertainment complex at a total cost of $9 million was completed
in December of 1997 and operations commenced on December 15,
1997. Total construction expenditures for the new Metropolis
dining and entertainment complex were approximately $6 million in
fiscal 1998 and $3 million in fiscal 1997.
During the second quarter of 1998, the Company signed a
contract for the purchase of the Lake Charles Holiday Inn which
adjoins the Lake Charles Facility. The transaction closed on
January 9, 1998, and was funded with $20 million of borrowings
under the Credit Facility.
In December, 1997, the Company amended its existing bank
Credit Agreement to permit the acquisition of the Lake Charles
Holiday Inn and to modify its interest rate and repayment terms.
The amendment fixed the interest rate at 2.5% above the bank's
prime rate commencing October 1, 1997, and fixed the maximum
amount of borrowing available under the Credit Facility at $50
million from December 31, 1997, until the expiration of the
Credit Agreement on June 30, 1998.
The Company is currently discussing the replacement of the
existing bank facility with a number of lending sources,
including its current bank group. The Company anticipates
finalizing new definitive financing arrangements by March 31,
1998.
The Company believes that expected cash flow from operations
will be sufficient to meet debt service and working capital
requirements upon finalizing the new definitive financing
arrangements.
Forward Looking Information
Certain information included in this Quarterly Report on
Form 10-Q contains, and other materials filed or to be filed by
the Company with the Securities and Exchange Commission (as well
as information included in oral statements or other written
statements made or to be made by the Company) contain or will
contain or include, forward-looking statements within the meaning
of Section 21E of the Securities and Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as
amended. Such forward-looking statements address, among other
things, the effects of competition, the resolution of pending or
threatened litigation or regulatory proceedings concerning the
Company's alleged non-compliance with Missouri's gaming laws and
Constitution, plans for future riverboat hull inspections, plans
for future property enhancements, capital expenditure programs
and requirements, financing and liquidity sources and the effects
of regulation (including gaming licensure and regulation, state
and local regulation, tax regulation, and the potential for
regulatory reform). All statements other than statements of
historical facts included in this filing, including without
limitation, such statements under Part I, Item 2 and Part II,
Item 1 and located elsewhere herein regarding pending or
threatened litigation or legal proceedings or the Company's
operations, financial position and business strategy, constitute
forward-looking statements. In addition, forward-looking
statements generally can be identified by the use of forward-
looking terminology such as "may," "will," "expect," "intend,"
"estimate," "believe," or "continue" or the negative thereof or
variations thereon or similar terminology. Such forward-looking
information is based upon management's current plans or
expectations and is subject to a number of uncertainties and
risks that could significantly affect current plans, anticipated
actions, and the Company's future financial condition and
results. These uncertainties and risks include, but are not
limited to, those relating to conducting operations in an
increasingly competitive environment, conducting operations at a
newly or recently developed site or in a jurisdiction for which
gaming has recently been permitted, changes in state and local
gaming laws and regulations, development and construction
activities, leverage and debt service requirements (including
sensitivity to fluctuation in interest rates), general economic
conditions, the U.S. Coast Guard's acceptance of underwater hull
inspections as an acceptable alternative to dry docking and
inspection, changes in federal and state tax laws, action taken
under applications for licenses (including renewals) and
approvals under applicable laws and regulations (including gaming
laws and regulations), and the legalization of gaming in certain
jurisdictions. As a consequence, anticipated actions and future
financial condition and results may differ from those expressed
in any forward-looking statements made by or on behalf of the
Company and no assurance can be given that such statements will
prove to be correct.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Poulos, Ahern and Schreier Litigation
The Company, certain suppliers and distributors of video
poker and electronic slot machines and over forty other casino
operators have been named as defendants in a class action suit
filed April 26, 1994 in the United States District Court, Middle
District of Florida, by William Ahern and William H. Poulos. The
plaintiffs allege common law fraud and deceit, mail fraud, wire
fraud and Racketeer Influenced and Corrupt Organizations Act
violations in the marketing and operation of video poker games
and electronic slot machines. The suit seeks unspecified damages
and recovery of attorney's fees and costs. On December 9, 1994,
an Order was entered by the District Court in Florida
transferring the consolidated action to the United States
District Court for the District of Nevada. The defendants filed
various motions seeking dismissal of the action.
On or about October 27, 1995, the Company was served with a
purported class action captioned Schreier, et al. v. Players
International, et al. In the United States District Court for the
District of Nevada which is essentially identical to the Poulos
and Ahern litigation, except for certain variations in the
definition of the purported class. The matter has also been
consolidated with the Poulos and Ahern litigation.
On April 17, 1996, the Court dismissed plaintiffs' Complaint
without prejudice for failure to plead their claims with
specificity and dismissed defendants' remaining substantive
motions as moot. The Court permitted plaintiffs to file and
Amended Complaint. The matter is currently in the discovery
stage, after which substantive motions for dismissal will be
filed by the defendants. The Company believes that the
plaintiffs claims are wholly without merit and does not expect
that the lawsuit will have a material adverse effect on the
Company's financial position or results of operations.
J.A. Miller, et al. V. Showboat Star Partnership, et al.
Showboat Star Partnership, a subsidiary of the Company, was
served with a petition captioned J.A. Miller, et al. v. Showboat
Star Partnership, et al. on or about February 27, 1997, Docket
No. 10-14544, in the 38th Judicial District Court, Parish of
Cameron, State of Louisiana. The plaintiffs, a group of oyster
fishermen, allege in the petition that on or about February 2,
1997, the Star Riverboat discharged raw sewerage and other
hazardous and toxic substances from the bilge of the vessel in to
Lake Charles. Plaintiffs further allege that since 1994 the Star
Riverboat and the Players Lake Charles Riverboat have discharged
raw sewage and other hazardous and toxic substances into Lake
Charles which is part of the Calcasieu Estuary. Plaintiffs claim
that alleged acts of the Company have resulted in great damage to
natural oyster beds forty-three (43) miles down river in Cameron
Parish, resulting in oysters situated thereon to become dangerous
and unfit for human consumption and or/preventing the oyster
fishermen from harvesting said oysters. The oyster fishermen are
claiming both compensatory and punitive damages. The matter is
in the early stages of litigation. The Company has filed several
motions in response to the petition including motions to dismiss
the action. The Company has also requested certain discovery in
connection with the motions. The Company intends to vigorously
defend this action.
W. Todd Akin, et al. v. Missouri Gaming Commission
The matter of W. Todd Akin et al. v. Missouri Gaming
Commission was filed in the Circuit Court of Cole County in the
fall of 1996. While none of the Missouri licensees or applicants
were named in the suit, Players MH, L.P., a subsidiary of the
Company and Harrah's Maryland Heights Corporation, both 50%
partners in the Riverside Joint Venture, and the Missouri
Riverboat Gaming Association, together with the City of Maryland
Heights, intervened in order to protect their respective
interests. The suit sought a judicial declaration that the
Missouri Riverboat Gaming Act is unconstitutional because it
permits facilities (such as the Company/Harrah's facility in
Maryland Heights) to be located upon artificial basins fed by the
Missouri River. The statute was found constitutional and the
suit was dismissed in its entirety on the merits by the trial
court in December, 1996. That dismissal was appealed directly to
the Missouri Supreme Court by the Plaintiffs in January, 1997.
On November 25, 1997, the Missouri Supreme Court ruled that
gaming may occur only in artificial spaces that are contiguous to
the surface stream of the Missouri and Mississippi Rivers. The
case was remanded to the trial court for a factual determination
as to whether those casino operators meet this requirement. The
plaintiffs dismissed their case against the Company after this
ruling but prior to a determination by the trial court on this
issue.
In January, 1998, the Company was advised by the Attorney
General's office in Missouri and the Missouri Gaming Commission
that it is considering taking disciplinary action with respect to
the issues raised by the Missouri Supreme Court's Akin decision.
Such action could include the filing of a disciplinary complaint
against the Maryland Heights Facility and its operators, seeking
to resolve the issues raised by the Missouri Supreme Court's
decision or undertaking some other form of action against the
Company. In response to this, the Company (and certain other
casino companies) sought and obtained a preliminary writ of
prohibition restraining order preventing the Attorney General and
the Missouri Gaming Commission from taking such action. The
Attorney General is presently seeking to have this restraining
order lifted. If the restraining order is lifted, the action
will either go before the Missouri Gaming Commission or a court
of competent jurisdiction to determine whether Missouri gaming
operators which operate in artificial basins, including the
Company, are in violation of Missouri law. Not all Missouri
gaming licensees would be adversely affected by any decision
against the Company or similarly situated Missouri operators.
Because of management's belief that the Company is entitled
to clarification of the uncertainty caused by the Akin decision
and the Missouri Gaming Commission's and Attorney General's
interpretation of it, the Company and Harrah's filed suit for a
declaratory judgment in Circuit Court on January 22, 1998. Such
suit seeks a declaration that: (i) the Maryland Heights Facility
meets all requirements of law as to location; (ii) the Company's
reasonable reliance upon the prior approval of the Missouri
Gaming Commission of its location prohibits adverse action by the
Commission or Attorney General against the Company on the basis
of the subsequent Akin decision; (iii) the Company, if found not
in compliance to any extent, must be permitted a period of time
within which to remedy any deficiency in its facilities to bring
them into compliance; and (iv) the Company is entitled to be
justly compensated for any financial loss resulting from adverse
actions of the Missouri Gaming Commission or the Attorney General
in enforcing their interpretation of the Akin decision.
Because of the questions raised, but not answered, in the
Missouri Supreme Court's Akin decision, and because the Maryland
Heights Facility is not subject to any complaint or claim with
respect to this matter at this time, the Company cannot predict
what effect the Missouri Supreme Court's ruling, or any action of
the Attorney General or Missouri Gaming Commission will have on
the operations at Maryland Heights. At this time, based on
discussions with Missouri legal counsel, management believes that
any potential problem could be remedied through (i) a public
referendum at the November 1998 Missouri election, in order to
cure any ambiguity or uncertainty in the law or (ii) the defenses
available to the Company if a lawsuit or administrative action
based on this ruling were to be brought or (iii) remedial action
to the property.
If remedial action to the Maryland Heights Facility was
required, management would evaluate whether the cost of
remediation would be justified in light of the projected future
results of the Company's Maryland Heights operations. Such
costs of remediation, if undertaken, could be material to the
Company's overall financial condition. However, management
cannot presently provide any assurance as to whether the Company
would be permitted to modify the Maryland Heights Facility to
comply with any such remediation order or whether the Company's
legal defenses, legislative or electoral avenues or other means
available would be successful to permit continued use of the
facility without interruption. Further, it is unclear, in the
event of a determination of non-compliance, what penalty or
monetary obligation or sanction, if any, including a possible
temporary or permanent closure, could be imposed on the Maryland
Heights Facility. If the Company could not, or chose not to,
remediate the property and it was closed, the Company could incur
a substantial write-down in asset values related to the property
in addition to the possibility of incurring substantial losses
related to any potential shut-down or suspension of operations.
Such negative impacts may be offset, in part, by certain tax
benefits. Therefore, the Company cannot provide any assurance
that there will not be a material adverse impact from the Akin
decision and related developments.
Item 6. Exhibits and Reports on Form 8-K
Exhibits Filed with this Form 10-Q
Exhibit No. Exhibit Description
4.1 4th Supplemental Indenture regarding the 10 7/8%
Senior Notes due 2005
4.2 5th Supplemental Indenture regarding the 10 7/8%
Senior Notes due 2005
4.3 6th Supplemental Indenture regarding the 10 7/8%
Senior Notes due 2005
10.1 Letter Agreement with Wells Fargo Bank regarding
terms of Reducing Revolving Credit Agreement
27.0 Financial Data Schedule
Reports on Form 8-K Filed During Quarter
None
SIGNATURE
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
PLAYERS INTERNATIONAL, INC.
Date: February 13, 1998 By: /s/ Peter J. Aranow
Peter J. Aranow, Executive Vice
President, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 24274
<SECURITIES> 0
<RECEIVABLES> 4678
<ALLOWANCES> 664
<INVENTORY> 1547
<CURRENT-ASSETS> 33933
<PP&E> 259378
<DEPRECIATION> 40149
<TOTAL-ASSETS> 398251
<CURRENT-LIABILITIES> 62253
<BONDS> 151065
0
0
<COMMON> 163
<OTHER-SE> 158317
<TOTAL-LIABILITY-AND-EQUITY> 398251
<SALES> 0
<TOTAL-REVENUES> 242708
<CGS> 0
<TOTAL-COSTS> 115439
<OTHER-EXPENSES> 105442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18026
<INCOME-PRETAX> 4215
<INCOME-TAX> 1636
<INCOME-CONTINUING> 2579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2579
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
FOURTH SUPPLEMENTAL INDENTURE
This Fourth Supplemental Indenture (the "Fourth Supplemental
Indenture") dated as of October 24, 1995, is by and among Players
International, Inc., a Nevada corporation (the "Company"); the
Guarantors whose names are set forth on the signature pages
below, Players Holding, Inc., a Nevada corporation; Players
Services, Inc., a New Jersey corporation; Players Resources,
Inc., a Nevada corporation; Players Entertainment, Inc., a Nevada
corporation; Players MH, L.P., a Missouri limited partnership;
and First Fidelity Bank, National Association, as Trustee (the
"Trustee").
WITNESSETH:
WHEREAS, the Company, certain of the Guarantors and the
Trustee have entered into an Indenture dated as of April 10, 1995
(the "Original Indenture"), as supplemented by a First
Supplemental Indenture dated as of April 25, 1995, as
supplemented by a Second Supplemental Indenture dated as of
September 19, 1995, and as supplemented by a Third Supplemental
Indenture dated as of October 17, 1995, in connection with the
Company's issuance of 10-7/8% Senior Notes due 2005 (the "Senior
Notes");
WHEREAS, Section 5.20 of the Original Indenture contemplates
that each Subsidiary created or acquired after the Issue Date
shall become a Guarantor of the Senior Notes and a party to the
Original Indenture;
WHEREAS, Players Holding, Inc., Players Services, Inc.,
Players Resources, Inc., Players Entertainment, Inc., and Players
MH, L.P. (collectively, the "New Subsidiaries") are Subsidiaries
that were created or acquired by the Company after the Issue
Date;
WHEREAS, the parties hereto are authorized and deem it
necessary and desirable to enter into this Fourth Supplemental
Indenture for the purpose of adding the New Subsidiaries as
Guarantors of the Senior Notes; and
WHEREAS, all acts and things necessary to constitute this
Fourth Supplemental Indenture a valid indenture and agreement
according to its terms have been done and performed and the
parties hereto have duly authorized the execution and delivery of
this Fourth Supplemental Indenture and are jointly and severally
obligated hereunder.
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby covenant and agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms
in the Original Indenture.
2. New Subsidiaries Guarantee. The New Subsidiaries
hereby irrevocably and unconditionally guarantee each Senior Note
as provided in Article XIII of the Original Indenture. The New
Subsidiaries shall execute and deliver to the Trustee a guarantee
in the form of Exhibit A hereto (the "New Subsidiaries
Guarantee"). The New Subsidiaries Guarantee shall have the same
force and effect as the Guarantee executed and delivered by the
Initial Guarantors and endorsed on the Senior Notes.
3. Parties to the Indenture. Upon execution and delivery
of this Fourth Supplemental Indenture, the New Subsidiaries shall
become parties to the Original Indenture with the same force and
effect as if they were original signatories to the Original
Indenture, subject to all the terms and conditions contained
therein.
4. Confirmation of Indenture. Except as amended and
supplemented by this Fourth Supplemental Indenture, the Indenture
as heretofore supplemented by the First, Second and Third
Supplemental Indentures is ratified and confirmed in all
respects.
5. Governing Law. This Fourth Supplemental Indenture
shall be governed by and construed in accordance with the laws of
the State of New York.
6. Execution in Counterparts. This Fourth Supplemental
Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Fourth Supplemental Indenture to be duly executed as of the date
first written above.
PLAYERS INTERNATIONAL, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Executive Vice President,
Chief Financial Officer
and Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Trustee
By: /s/ John H. Clapham
Name: John H. Clapham
Title: Assistant Vice President,
Assistant Secretary
PLAYERS LAKE CHARLES, INC.
By:
/s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT MANAGEMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, LLC
By: Players Riverboat Management, Inc.,
member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SHOWBOAT STAR PARTNERSHIP
By: Players Riverboat, LLC,
general partner
By: Players Riverboat Management, Inc.,
member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
By: Players Riverboat Management, Inc.,
general partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS NEVADA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE GOLF CLUB, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE LAND, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS INDIANA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY
MANAGEMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS BLUEGRASS DOWNS, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
RIVER BOTTOM, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SOUTHERN ILLINOIS RIVERBOAT/
CASINO CRUISES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVER CITY, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHREVEPORT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHUTTLE, INC.
By: /s/ Peter J.. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS NEVADA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS HOLDING, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SERVICES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RESOURCES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS ENTERTAINMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MH, L.P.
By: Players Maryland Heights, Inc.,
general
partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
Exhibit A
FORM OF GUARANTEE
For value received, Players Holding, Inc., a Nevada
corporation; Players Services, Inc., a New Jersey corporation;
Players Resources, Inc., a Nevada corporation; Players
Entertainment, Inc., a Nevada corporation; and Players MH, L.P.,
a Missouri limited partnership, hereby unconditionally guarantee
to the Holders of the Senior Notes the due and punctual payment,
as set forth in the Indenture pursuant to which such Senior Notes
and this Guarantee were issued, of the principal of, premium (if
any) and interest on such Senior Notes when and as the same shall
become due and payable for any reason according to the terms of
such Senior Notes and Article XIII of the Indenture.
PLAYERS HOLDING, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SERVICES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RESOURCES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS ENTERTAINMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MH, L.P.
By: Players Maryland Heights, Inc.,
general
partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
FIFTH SUPPLEMENTAL INDENTURE
This Fifth Supplemental Indenture (the "Fifth Supplemental
Indenture") dated as of December 18, 1995 is by and among Players
International, Inc., a Nevada corporation (the "Company"); the
Guarantors whose names are set forth on the signature pages
below, Players Lake Charles Riverboat, Inc., a Louisiana
corporation; Players LC, Inc., a Nevada Corporation; and First
Fidelity Bank, National Association, as Trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Company, certain of the Guarantors and the
Trustee have entered into an Indenture dated as of April 10, 1995
(the "Original Indenture"), as supplemented by a First
Supplemental Indenture dated as of April 25, 1995, as
supplemented by a Second Supplemental Indenture dated as of
September 19, 1995, as supplemented by a Third Supplemental
Indenture dated as of October 17, 1995 and as supplemented by a
Fourth Supplemental Indenture dated as of October 24, 1995, in
connection with the Company's issuance of 10-7/8% Senior Notes
due 2005 (the "Senior Notes");
WHEREAS, Section 5.20 of the Original Indenture contemplates
that each Subsidiary created or acquired after the Issue Date
shall become a Guarantor of the Senior Notes and a party to the
Original Indenture;
WHEREAS, Players Lake Charles Riverboat, Inc. and Players
LC, Inc. (collectively, the "New Subsidiaries") are Subsidiaries
that were created or acquired by the Company after the Issue
Date;
WHEREAS, the parties hereto are authorized and deem it
necessary and desirable to enter into this Fifth Supplemental
Indenture for the purpose of adding the New Subsidiaries as
Guarantors of the Senior Notes; and
WHEREAS, all acts and things necessary to constitute this
Fifth Supplemental Indenture a valid indenture and agreement
according to its terms have been done and performed and the
parties hereto have duly authorized the execution and delivery of
this Fifth Supplemental Indenture and are jointly and severally
obligated hereunder.
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby covenant and agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms
in the Original Indenture.
2. New Subsidiaries Guarantee. The New Subsidiaries
hereby irrevocably and unconditionally guarantee each Senior Note
as provided in Article XIII of the Original Indenture. The New
Subsidiaries shall execute and deliver to the Trustee a guarantee
in the form of Exhibit A hereto (the "New Subsidiaries
Guarantee"). The New Subsidiaries Guarantee shall have the same
force and effect as the Guarantee executed and delivered by the
Initial Guarantors and endorsed on the Senior Notes.
3. Parties to the Indenture. Upon execution and delivery
of this Fifth Supplemental Indenture, the New Subsidiaries shall
become parties to the Original Indenture with the same force and
effect as if they were original signatories to the Original
Indenture, subject to all the terms and conditions contained
therein.
4. Confirmation of Indenture. Except as amended and
supplemented by this Fifth Supplemental Indenture, the Indenture
as heretofore supplemented by the First, Second, Third and Fourth
Supplemental Indentures is ratified and confirmed in all
respects.
5. Governing Law. This Fifth Supplemental Indenture shall
be governed by and construed in accordance with the laws of the
State of New York.
6. Execution in Counterparts. This Fifth Supplemental
Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Fifth Supplemental Indenture to be duly executed as of the date
first written above.
PLAYERS INTERNATIONAL, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Executive Vice President,
Chief Financial Officer
and Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Trustee
By: /s/ John H. Clapham
Name: John H. Clapham
Title: Assistant Vice President,
Assistant Secretary
PLAYERS LAKE CHARLES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT MANAGEMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, LLC
By: Players Riverboat Management, Inc.,
member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SHOWBOAT STAR PARTNERSHIP
By: Players Riverboat, LLC,
general partner
By: Players Riverboat Management, Inc.,
member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
By: Players Riverboat Management, Inc.,
general partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS NEVADA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE GOLF CLUB, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE LAND, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS INDIANA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY
MANAGEMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS BLUEGRASS DOWNS, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
RIVER BOTTOM, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SOUTHERN ILLINOIS RIVERBOAT/
CASINO CRUISES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVER CITY, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHREVEPORT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHUTTLE, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS NEVADA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS HOLDING, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SERVICES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RESOURCES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS ENTERTAINMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS, L.P.
By: Players Maryland Heights, Inc.,
general
partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LAKE CHARLES RIVERBOAT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LC, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
Exhibit A
FORM OF GUARANTEE
For value received, Players Lake Charles Riverboat, Inc.,
a Louisiana corporation and Players LC, Inc., a Nevada Corporation,
hereby unconditionally guarantee to the Holders of the Senior Notes
the due and punctual payment, as set forth in the Indenture
pursuant to which such Senior Notes and this Guarantee were issued,
of the principal of, premium (if any) and interest on such Senior
Notes when and as the same shall become due and payable for any
reason according to the terms of such Senior Notes and Article XIII
of the Indenture.
PLAYERS LAKE CHARLES RIVERBOAT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LC, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SIXTH SUPPLEMENTAL INDENTURE
This Sixth Supplemental Indenture (the "Sixth Supplemental
Indenture") dated as of June 17, 1996, is by and among Players
International, Inc., a Nevada corporation (the "Company"); the
Guarantors whose names are set forth on the signature pages
below, Players Development, Inc., a Nevada corporation; Players
Lake Charles, LLC, a Louisiana limited liability company; and
First Fidelity Bank, National Association, as Trustee (the
"Trustee").
WITNESSETH:
WHEREAS, the Company, certain of the Guarantors and the
Trustee have entered into an Indenture dated as of April 10, 1995
(the "Original Indenture"), as supplemented by a First
Supplemental Indenture dated as of April 25, 1995, as
supplemented by a Second Supplemental Indenture dated as of
September 19, 1995, as supplemented by a Third Supplemental
Indenture dated as of October 17, 1995, as supplemented by a
Fourth Supplemental Indenture dated as of October 24, 1995 and as
supplemented by a Fifth Supplemental Indenture dated as of
December 18, 1995 in connection with the Company's issuance of 10-
7/8% Senior Notes due 2005 (the "Senior Notes");
WHEREAS, Section 5.20 of the Original Indenture contemplates
that each Subsidiary created or acquired after the Issue Date
shall become a Guarantor of the Senior Notes and a party to the
Original Indenture;
WHEREAS, Players Development, Inc. and Players Lake
Charles, LLC (collectively, the "New Subsidiaries") are
Subsidiaries that were created or acquired by the Company after
the Issue Date;
WHEREAS, Players Lake Charles, LLC is the successor to a
merger between Players Lake Charles, LLC and Players Lake
Charles, Inc. and is executing this Sixth Supplemental Indenture
in order to affirmatively evidence the guarantee obligation of
Players Lake Charles, Inc., as guarantor under the Original
Indenture, assumed by Players Lake Charles, LLC pursuant to such
merger;
WHEREAS, the parties hereto are authorized and deem it
necessary and desirable to enter into this Sixth Supplemental
Indenture for the purpose of adding the New Subsidiaries as
Guarantors of the Senior Notes; and
WHEREAS, all acts and things necessary to constitute this
Sixth Supplemental Indenture a valid indenture and agreement
according to its terms have been done and performed and the
parties hereto have duly authorized the execution and delivery of
this Sixth Supplemental Indenture and are jointly and severally
obligated hereunder.
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby covenant and agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms
in the Original Indenture.
2. New Subsidiaries Guarantee. The New Subsidiaries
hereby irrevocably and unconditionally guarantee each Senior Note
as provided in Article XIII of the Original Indenture. The New
Subsidiaries shall execute and deliver to the Trustee a guarantee
in the form of Exhibit A hereto (the "New Subsidiaries
Guarantee"). The New Subsidiaries Guarantee shall have the same
force and effect as the Guarantee executed and delivered by the
Initial Guarantors and endorsed on the Senior Notes.
3. Parties to the Indenture. Upon execution and delivery
of this Sixth Supplemental Indenture, the New Subsidiaries shall
become parties to the Original Indenture with the same force and
effect as if they were original signatories to the Original
Indenture, subject to all the terms and conditions contained
therein.
4. Confirmation of Indenture. Except as amended and
supplemented by this Sixth Supplemental Indenture, the Indenture
as heretofore supplemented by the First, Second, Third, Fourth
and Fifth Supplemental Indentures is ratified and confirmed in
all respects.
5. Governing Law. This Sixth Supplemental Indenture shall
be governed by and construed in accordance with the laws of the
State of New York.
6. Execution in Counterparts. This Sixth Supplemental
Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Sixth Supplemental Indenture to be duly executed as of the date
first written above.
PLAYERS INTERNATIONAL, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Executive Vice President,
Chief Financial Officer
and Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Trustee
By: /s/ John H. Clapham
Name: John H. Clapham
Title: Assistant Vice President,
Assistant Secretary
PLAYERS RIVERBOAT MANAGEMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, LLC
By: Players Riverboat Management, Inc.,
member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SHOWBOAT STAR PARTNERSHIP
By: Players Riverboat, LLC,
general partner
By: Players Riverboat Management, Inc.,
member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
By: Players Riverboat Management, Inc.,
general partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS NEVADA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE GOLF CLUB, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE LAND, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS INDIANA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY
MANAGEMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS BLUEGRASS DOWNS, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
RIVER BOTTOM, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
SOUTHERN ILLINOIS RIVERBOAT/
CASINO CRUISES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVER CITY, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHREVEPORT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHUTTLE, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS NEVADA, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS HOLDING, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SERVICES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RESOURCES, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS ENTERTAINMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MH, L.P.
By: Players Maryland Heights, Inc.,
general
partner
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LAKE CHARLES RIVERBOAT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LC, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS DEVELOPMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LAKE CHARLES, LLC
By: Players Lake Charles Riverboat,
Inc., member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
Exhibit A
FORM OF GUARANTEE
For value received, Players Development, Inc., a Nevada
corporation and Players Lake Charles, LLC, a Louisiana limited
liability company, hereby unconditionally guarantee to the Holders
of the Senior Notes the due and punctual payment, as set forth in
the Indenture pursuant to which such Senior Notes and this
Guarantee were issued, of the principal of, premium (if any) and
interest on such Senior Notes when and as the same shall become due
and payable for any reason according to the terms of such Senior
Notes and Article XIII of the Indenture.
PLAYERS DEVELOPMENT, INC.
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
PLAYERS LAKE CHARLES, LLC
By: Players Lake Charles Riverboat,
Inc., member
By: /s/ Peter J. Aranow
Name: Peter J. Aranow
Title: Treasurer
January 9, 1998
Players International, Inc.
1300 Atlantic Avenue, Suite 800
Atlantic City, New Jersey 08401
Attention: Executive Vice President-Finance
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated
Credit Agreement dated as of December 16, 1996, as amended by the
First Amendment thereto dated as of February 14, 1997 and the
Second Amendment thereto dated as of March 15, 1997 (said Credit
Agreement, as so amended, being the "Credit Agreement") by and
among PLAYERS INTERNATIONAL, INC., a Nevada corporation, as the
borrower ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES THEREOF (each individually referred to herein as
a "Lender" and collectively as "Lenders"), WELLS FARGO BANK,
N.A., as Administrative Agent, a Managing Agent and a Co-Arranger
("Administrative Agent"), BANKERS TRUST COMPANY, as a Managing
Agent, and BT SECURITIES CORPORATION, as a Co-Arranger.
Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement.
Commitment Reductions and Interest Rate Increases
Section 2.4A of the Credit Agreement provides for the
reduction of the Tranche A Commitments by $7,500,000 on December
31, 1997 and by $7,500,000 on March 31, 1998. The Company has
requested the Lenders to waive $5,000,000 of the reduction in
Tranche A Commitments scheduled for December 31, 1997, and waive
the entire $7,500,000 reduction in Tranche A Commitments
scheduled for March 31, 1998. Lenders and Administrative Agent
shall hereby waive $5,000,000 of the reduction in Tranche A
Commitments scheduled for December 31, 1997, so that the Tranche
A Commitments shall be reduced by $2,500,000 on December 31,
1997, unless the Holiday Inn Purchase Agreement (as defined
below) shall have been terminated on or before December 31, 1997.
In addition, if the Holiday Inn Acquisition occurs on or before
January 10, 1998, Lenders and Administrative Agent shall hereby
waive (such waiver to be effective upon the occurrence of the
Holiday Inn Acquisition) the entire $7,500,000 reduction in
Tranche A Commitments scheduled for March 31, 1998.
The Applicable Base Rate Margin for Tranche A Loans is
a percentage per annum equal to the sum of 2.50% plus the
Mesquite Sale Margin Increase. The Company has requested the
Lenders to waive the portion of the interest accruing on the
Loans to the extent that such interest is attributable to the
Mesquite Sale Margin Increase. Lenders and Administrative Agent
hereby waive the portion of the interest accruing on the Loans
attributable to the Mesquite Sale Margin Increase, such waiver to
be retroactive to September 30, 1997. As a result of such
waiver, the Applicable Base Rate Margin for Tranche A Loans shall
be a percentage per annum equal to 2.50%.
Holiday Inn Acquisition
The Company and Lakeshore Hotels, Ltd. have entered
into the Holiday Inn Purchase Agreement (as defined below)
pursuant to which PLC shall acquire the Holiday Inn Facilities
(as defined below).
Subsection 6.10C of the Credit Agreement provides that
Company and its Subsidiaries shall execute such documents as
Administrative Agent may reasonably request to perfect
Administrative Agent's lien on real or personal property located
at any of the Facilities acquired after the Effective Date.
Lenders, Administrative Agent, and Company desire to set forth
herein the documents that Company and PLC will deliver to
Administrative Agent pursuant to subsection 6.10C of the Credit
Agreement in connection with the Holiday Inn Acquisition.
The Company hereby agrees to deliver or cause to be
delivered the following documents and to satisfy the following
conditions on or before the Holiday Inn Acquisition Date, in
satisfaction of the requirements under subsection 6.10C of the
Credit Agreement. The Company agrees not to consummate the
Holiday Acquisition until the delivery of such documents and
satisfaction of such conditions, and acknowledges that the
Lenders will not be obligated to fund Loans the proceeds of which
will be used to fund the Holiday Inn Acquisition unless such
documents are delivered and conditions satisfied:
A. Holiday Inn Purchase Agreement. On or before the
Holiday Inn Acquisition Date, Company will deliver to
Administrative Agent an Officers' Certificate from the Company
attaching a true and correct copy of the Holiday Inn Purchase
Agreement and all amendments or waivers thereto and modifications
thereof, and stating that (i) the Holiday Inn Purchase Agreement,
as so amended, is in full force and effect and no term or
condition thereof has been amended, modified or waived, and (ii)
all conditions precedent to the consummation of the Holiday Inn
Acquisition have been satisfied or waived with the consent of
Administrative Agent. The Holiday Inn Purchase Agreement, as so
amended, shall be in form substance satisfactory to
Administrative Agent.
B. Consummation of Holiday Inn Purchase.
1. All conditions to the consummation of the Holiday
Inn Acquisition set forth in the Holiday Inn Purchase
Agreement shall have been satisfied or the fulfillment of
any such conditions shall have been waived with the consent
of Administrative Agent;
2. The aggregate consideration to be paid by the
Company and its Subsidiaries under the Holiday Inn Purchase
Agreement will not exceed $20,000,000 and the aggregate
amount of Loans to be borrowed for the purpose of funding
the Holiday Inn Acquisition will not exceed $20,000,000;
3. All Loans to be made for the purpose of funding
the Holiday Inn Acquisition shall be remitted by the
Administrative Agent to the Title Company (as defined in
Paragraph D below) to be held in escrow pursuant to
instructions in form and substance satisfactory to the
Administrative Agent. Such instructions shall provide,
among other things that the escrowed funds shall not be
delivered to the seller under the Holiday Inn Purchase
Agreement unless (i) the Title Company has committed to
issue to the Lenders the Title Policy defined in Paragraph D
below and (ii) substantially simultaneously with the release
of such escrowed funds, PLC shall consummate the Holiday Inn
Acquisition;
4. Administrative Agent will have received an
Officers' Certificate of Company to the effects set forth in
clauses (1)-(3) above.
C. Perfection of Security Interests. Loan Parties will
have taken or caused to be taken such actions in such a manner so
that Administrative Agent, on behalf of Lenders, will have, prior
to the release of any funds from the escrow account described in
Paragraph B(3), a valid and perfected first priority security
interest (subject only to Liens permitted under subsection 7.2 of
the Credit Agreement) in the Holiday Inn Facilities. Such
actions will include, without limitation:
1. the delivery to Administrative Agent of Uniform
Commercial Code financing statements and fixture filings,
executed by PLC as to the Holiday Inn Facilities for all
jurisdictions as may be necessary or desirable to perfect
Administrative Agent's security interest in such Collateral;
2. evidence that duly executed counterparts of the
Holiday Inn Mortgage will be timely recorded in all
locations to the extent necessary or desirable, in the
reasonable judgment of Administrative Agent, to effectively
create a valid and enforceable first priority Lien (subject
only to Permitted Encumbrances) on the Holiday Inn
Facilities (including the Improvements constructed thereon)
in favor of Administrative Agent for the benefit of Lenders;
and
3. evidence reasonably satisfactory to Administrative
Agent that all other filings, recordings and other actions
Administrative Agent deems necessary or advisable to
establish, preserve and perfect the first priority Liens
(subject only to Permitted Encumbrances) granted to
Administrative Agent in the Holiday Inn Facilities shall
have been made.
D. Title Policy. Administrative Agent will have received,
prior to the release of any funds from the escrow account
described in Paragraph B(3), an American Land Title Association
Extended Coverage Loan Policy (1990, without modification,
revision or amendment) (the "Title Policy") (with proof of the
payment of the premiums thereon) or commitment therefor in form
and substance acceptable to Administrative Agent issued by a
title company approved by Administrative Agent (the "Title
Company"), together with coinsurance and reinsurance from title
insurance companies approved by Administrative Agent, showing PLC
as the owner in fee simple of the Holiday Inn Premises, and
insuring the lien of the Holiday Inn Mortgage to be a first lien
against the Holiday Inn Premises, free and clear of all defects,
encumbrances and exceptions, except the Permitted Encumbrances,
together with such affirmative insurance as Administrative Agent
may reasonably require. The Title Policy shall contain, among
other things:
1. Full coverage against mechanic's liens (filed and
inchoate);
2. A reference to the survey but no survey exceptions
except those theretofore approved in writing by
Administrative Agent and its counsel;
3. A variable interest rate endorsement;
4. A "revolving credit line" endorsement"; and
5. A "pending disbursements" clause in substantially
the following form:
"Pending disbursement of the full proceeds of the loan
secured by the deed of trust set forth under Schedule A
thereof, this policy insures only to the extent of the
amount actually disbursed but increases as each disbursement
is made in good faith and without knowledge of any defects
in, or objections to, the title up to the face amount of the
policy.
At the time of each disbursement of the proceeds of the
loan, the title must be continued down to such time for
possible liens or objections intervening between the date
hereof and the date of such disbursement."
E. UCC and Judgment Searches; Release of Existing Liens.
Prior to the release of any funds from the escrow account
described in Paragraph B(3), Administrative Agent will have
received (i) current searches of the UCC filing offices and
judgment searches with the Offices of the Secretary of State of
Louisiana and the local recorders office in the county or parish
in which the Holiday Inn Premises are located and (ii) duly
executed UCC termination statements and releases terminating any
Liens (other than Liens permitted by Section 7.2 of the Credit
Agreement) on or judgments affecting the Holiday Inn Facilities.
F. Flood Insurance. Administrative Agent will have been
provided with satisfactory evidence, which may be in the form of
a letter from an insurance broker, municipal engineer, or other
knowledgeable source unaffiliated with Company, as to whether
(a) any of the Holiday Inn Premises are located in an area
designated by the Department of Housing and Urban Development as
having special flood or mudslide hazards, and (b) any of the
communities in which any of the Holiday Inn Facilities are
located is participating in the National Flood Insurance Program.
If both of the aforesaid conditions exist, Administrative Agent
shall receive satisfactory policies of flood insurance covering
the applicable Improvements as required by the Flood Act.
G. Property Insurance. Prior to the release of any funds
from the escrow account described in Paragraph B(3),
Administrative Agent will have received original binders
evidencing Company or one or more of its Subsidiaries as named
insured and original certificates or policies of insurance,
together with loss payable and mortgagee endorsements
specifically including Administrative Agent and Lenders as
mortgagees, loss payees and additional insureds as required by
the applicable insurance provisions set forth in Section 6 of the
Holiday Inn Mortgage, accompanied by affidavits, certificates,
paid bills or other documents evidencing that all premium
payments are current.
H. Environmental Assessment. Administrative Agent will,
not less than five Business Days before the Holiday Inn
Acquisition Date have received written environmental assessment
reports and other information in form, scope and substance
satisfactory to Administrative Agent, independently prepared by
an environmental consultant acceptable to Administrative Agent,
evidencing the results of an environmental assessment performed
for the purpose of assessing current environmental liabilities of
Company and its Subsidiaries (including, without limitation, the
environmental condition of the Holiday Inn Premises). If such
environmental assessment recommends any action be taken with
respect to the Holiday Inn Premises, Administrative Agent shall
have received evidence satisfactory to Administrative Agent that
such action has been taken.
I. Environmental Indemnity. Company will have executed
and delivered to Administrative Agent an Environmental Indemnity
dated as of the Holiday Inn Acquisition Date in form and
substance satisfactory to Administrative Agent.
J. Survey. Administrative Agent shall have received and
approved a current boundary and location survey for the Holiday
Inn Premises which must (i) be certified to Administrative Agent
and the Title Company and (ii) meet the Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys established by ALTA
and ACSM in 1992.
K. Opinions of Company's Counsel. Lenders and their
respective counsel shall have received (i) originally executed
copies of the favorable written opinion of counsel for Company,
in form and substance reasonably satisfactory to Administrative
Agent and its counsel, dated as of the Holiday Inn Acquisition
Date and setting forth substantially the matters in the opinions
designated in Exhibit I annexed hereto and as to such other
matters as Administrative Agent acting on behalf of Lenders may
reasonably request and (ii) opinions from special counsel to
Company with respect to such matters governed by the laws of the
state of Illinois, Kentucky, Louisiana, Missouri, Nevada and New
Jersey, as Administrative Agent acting on behalf of Lenders may
reasonably request.
L. Necessary Consents. On or before the Holiday Inn
Acquisition Date, each Loan Party will have obtained all consents
that are required for the operation of the Holiday Inn Facilities
and the transactions contemplated under this Agreement and the
other Loan Documents of (i) Governmental Authorities and (ii) any
Person required under any Contractual Obligation of any Loan
Party, all of the foregoing in form and substance reasonably
satisfactory to Administrative Agent.
M. Governmental Authorizations. Administrative Agent will
have received reasonably satisfactory evidence that Company and
its Subsidiaries have obtained all Governmental Authorizations
(including, without limitation, all zoning approvals, special or
conditional use permits, variances, permits, licenses, liquor
licenses, certificates of occupancy and franchises) necessary to
permit the use, occupancy and operation of the Holiday Inn
Facilities.
In order to induce Lenders to enter into this Letter
Agreement, Company hereby represents and warrants that:
(a) as of the date hereof, there exists no Event of
Default or Potential Event of Default under the Credit
Agreement (other than the Missouri Defaults, if any);
(b) all representations and warranties contained in
the Credit Agreement and the other Loan Documents are true,
correct and complete in all material respects on and as of
the date hereof except to the extent such representations
and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all
material respects on and as of such earlier date, and except
to the extent that such representations and warranties
relate to the Missouri Defaults, if any; and
(c) as of the date hereof, Company has performed all
agreements to be performed on its part as set forth in the
Credit Agreement.
The following terms used in this Letter Agreement shall
have the following meanings:
"Holiday Inn Acquisition" means the acquisition by
PLC of the Holiday Inn Facilities pursuant to and in the
manner contemplated by the Holiday Inn Purchase Agreement.
"Holiday Inn Acquisition Date" means the date that
Holiday Acquisition occurs.
"Holiday Inn Facilities" means the Holiday Inn
Premises and the Improvements made thereon, along with all
other related personal and mixed property located thereon or
related thereto, including without limitation a 290-room
hotel building and other facilities and all FF&E and other
personal property located therein.
"Holiday Inn Mortgage" means an Act of Mortgage,
Fixture Filing and Security Agreement with Pledge and
Assignment of Leases and Rents, by and among PLC, as
mortgagor and owner, in favor of Administrative Agent, as
mortgagee, dated the Holiday Inn Acquisition Date, in form
and substance satisfactory to Administrative Agent.
"Holiday Inn Premises" means the real property to
be acquired in fee by PLC on the Holiday Inn Acquisition
Date, which property is commonly known as the Holiday Inn
motel located in Lake Charles, Louisiana, as more fully
described on Exhibit A to the Holiday Inn Mortgage.
"Holiday Inn Purchase Agreement" means that
certain Asset Purchase Agreement by and between Lakeshore
Hotels, Ltd. and the Company dated as of September 30, 1997,
as amended by an Amendment No.1, dated as of November 13,
1997, between the same parties in the form delivered to
Agent and Lenders prior to their execution of this Letter
Agreement.
Effective December 30, 1996, the Missouri Gaming
Commission adopted regulation 11 CSR 45-10.055. Under this
regulation, no Class A, Class B or Supplier Licensee may conduct
or negotiate a transaction effecting or designed to affect
ownership, custody, or use of any slot machine located or to be
located in the state of Missouri so that such ownership, custody
or use could be held or exercised in the state of Missouri by any
person or entity other than a licensed supplier or (in the case
of a supplier effecting such transaction) a Class A or Class B
Licensee. The passage of this regulation may mean that the
Company and its Subsidiaries no longer have requisite authority
under Missouri law for certain security interests granted to the
Collateral Agent for the benefit of the Lenders.
On November 25, 1997 the Supreme Court of Missouri
handed down a decision in Case No. 79594 (the "Missouri
Decision") that may affect the operations of the Company
Subsidiaries in the State of Missouri. The Company does not
believe that the Missouri Decision has resulted in a Material
Adverse Effect or other Event of Default. The Company
acknowledges that the Lenders may take a conflicting position
with respect to the effect of the Missouri Decision.
Except to the extent that the advancement of funds on
the Holiday Inn Acquisition Date constitutes a waiver of
subsections 4.4B(ii) and 4.4B(vii) of the Credit Agreement (which
the Lenders hereby grant) the Lenders have not waived any Events
of Default or Potential Events of Default arising from the
passage of Regulation 11 CSR 45-10.055 by the Missouri Gaming
Commission or arising from the Missouri Decision. Any such
Events of Default or Potential Events of Default are collectively
referred to herein as the "Missouri Defaults". Except as
expressly set forth herein, the terms, provisions and conditions
of the Credit Agreement and the other Loan Documents shall remain
in full force and effect and in all other respects are hereby
ratified and confirmed.
This Letter Agreement may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall
be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically
attached to the same document. This Letter Agreement shall
become effective as of the date hereof upon the execution of
counterparts hereof by Company, the Credit Support Parties and by
Lenders constituting Requisite Lenders and receipt by Company and
Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
Company is a party to various Collateral Documents and
Guarantors are party to certain Collateral Documents, the
Guaranty and the PHI Guaranty pursuant to which certain assets
are liened to secure performance of the Obligations or to
guaranty payment and performance of the Obligations. For
purposes hereof, Company and Guarantors are collectively referred
to herein as the "Credit Support Parties," and the Collateral
Documents and the Guaranty are collectively referred to herein as
the "Credit Support Documents."
Each Credit Support Party hereby acknowledges that it
has reviewed the terms and provisions of the Credit Agreement and
this Letter Agreement and consents to the limited waiver of
certain terms of the Credit Agreement effected pursuant to this
Letter Agreement. Each Credit Support Party hereby confirms that
each Credit Support Document to which it is a party or otherwise
bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations,"
"Guarantied Obligations" and "Secured Obligations," as the case
may be (in each case as such terms are defined in the applicable
Credit Support Document), including without limitation the
payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in
respect of the Obligations of Company now or hereafter existing
under or in respect of the Credit Agreement and the Notes defined
therein.
Each Credit Support Party acknowledges and agrees that
any of the Credit Support Documents to which it is a party or
otherwise bound shall continue in full force and effect and that
all of its obligations thereunder shall be valid and enforceable
and shall not be impaired or limited by the execution or
effectiveness of this Letter Agreement. Each Credit Support
Party represents and warrants that all representations and
warranties contained in the Credit Agreement and the Credit
Support Documents to which it is a party or otherwise bound are
true, correct and complete in all material respects on and as of
the date of effectiveness hereof to the same extent as though
made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all
material respects on and as of such earlier date, and except to
the extent such representations and warranties relate to the
Gaming Defaults.
Each Credit Support Party acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in
this Letter Agreement, such Credit Support Party is not required
by the terms of the Credit Agreement or any other Loan Document
to consent to this Letter Agreement and (ii) nothing in the
Credit Agreement, this Letter Agreement or any other Loan
Document shall be deemed to require the consent of such Credit
Support Party to any waivers of or amendments to the Credit
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Letter Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
ADMINISTRATIVE AGENT: WELLS FARGO BANK, N.A., (as
successor to First Interstate
Bank of Nevada, N.A.),
Individually as Administrative
Agent, a Managing Agent and Co-
Arranger
By:
Title:
LENDERS: FIRST NATIONAL BANK OF COMMERCE,
as a Lender
By:
Title:
COMMUNITY NATIONAL BANK OF
METROPOLIS, as a Lender
By:
Title:
PROTECTIVE ASSET MANAGEMENT
COMPANY, as a Lender
By:
Title:
COMPANY: PLAYERS INTERNATIONAL, INC.
By:
Title:
CREDIT SUPPORT PARTIES:
PLAYERS LAKE CHARLES, LLC
By PLAYERS LAKE CHARLES
RIVERBOAT, INC., Managing
Member
By:
Title:
PLAYERS NEVADA, INC.
By:
Title:
PLAYERS LC, INC.
By:
Title:
SOUTHERN ILLINOIS RIVERBOAT/
CASINO CRUISES, INC.
By:
Title:
PLAYERS BLUEGRASS DOWNS, INC.
By:
Title:
PLAYERS RIVERBOAT MANAGEMENT,
INC.
By:
Title:
PLAYERS RIVERBOAT, INC.
By:
Title:
PLAYERS MESQUITE GOLF CLUB,
INC.
By:
Title:
PLAYERS RIVERBOAT, LLC
By PLAYERS RIVERBOAT
MANAGEMENT, INC., Managing
Member
By:
Title:
PLAYERS MESQUITE LAND, INC.
By:
Title:
PLAYERS MARYLAND HEIGHTS, INC.
By:
Title:
SHOWBOAT STAR PARTNERSHIP
By PLAYERS RIVERBOAT, LLC
General Partner
By PLAYERS RIVERBOAT
MANAGEMENT, INC., Managing
Member
By:
Title:
ADDITIONAL LENDER: PAMCO CAYMAN LTD.
By: Protective Asset Management
Company
as Collateral Manager
By:
Title:
EXHIBIT I
LEGAL OPINIONS
Enclosed herein under separate tabs.
