<PAGE>
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
JUNE 21, 1996
- --------------------------------------------------------------------------------
(Date of Report--Date of Earliest Event Reported)
USTRAILS INC.
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(Exact Name of Registrant as Specified in Charter)
NEVADA 0-19743 75-2138671
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2711 LBJ FREEWAY, SUITE 200, DALLAS, TEXAS 75234
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(Address of Principal Executive Offices)
(214) 243-2228
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(Registrant's Telephone Number, Including Area Code)
INAPPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
EXHIBIT INDEX ON PAGE 5.
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ITEM 5. OTHER EVENTS
On June 21, 1996, USTrails Inc. (the "Company") announced that it has
modified the terms of its proposed restructuring of its outstanding Secured
Notes. The Company is increasing its offer to purchase for cash up to $20.1
million aggregate principal amount of Secured Notes to $780 per $1,000 of
principal amount, plus accrued interest of $60, from $740 per $1,000 of
principal amount. The Company also is extending the tender offer to expire at
12:00 midnight, Friday July 5, 1996, unless further extended. The tender offer
was previously scheduled to expire at 12:00 midnight, Tuesday, July 2, 1996.
Additionally, the Company will now pay a solicitation fee of $15 per $1,000
in principal amount of Secured Notes to any broker or dealer in securities which
is a member of any national securities exchange or of the NASD, foreign brokers
or dealers which agree to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States or any bank or trust company for
soliciting and obtaining the tender of Secured Notes accepted in the tender
offer.
The Company has also modified the terms of its proposed private offer to
certain holders of the Secured Notes to exchange their Secured Notes for a
combination of cash and newly issued debt and equity securities. As approved by
the Company's Board of Directors, assuming the minimum required exchange of
$81.3 million principal amount of Secured Notes, holders participating in the
exchange offer will receive pursuant to the modified terms of the exchange offer
in the aggregate $32.5 million in cash, $40 million in principal amount of newly
issued 12% Senior Subordinated Pay-In-Kind Notes due 2003 and 3,658,500 shares
of the Company's common stock, $.01 par value per share, representing
approximately 50% of the outstanding Common Stock after giving effect to the
restructuring. In addition, accrued interest of $60 through July 15, 1996 per
$1,000 of principal amount will be paid in cash. The aggregate exchange
consideration will be exchanged in a ratio of $400 in cash, $492 in principal
amount of Senior Subordinated PIK Notes and 45 shares of the Company's Common
Stock for each $1,000 in principal amount of Secured Notes.
As a condition to the exchange offer, each exchanging noteholder will be
required to agree not to tender the Secured Notes held by it pursuant to the
tender offer but only to exchange the Secured Notes held by it pursuant to the
exchange offer. The Company has contacted all holders of Secured Notes that may
be involved in the exchange offer. The offering of these securities will not be
registered under the Securities Act of 1933, as amended and the securities may
not be reoffered or sold absent registration or an applicable exemption from the
registration requirements of the Act.
The exchange offer and the tender offer are conditioned upon, among other
things, holders of at least $81.3 million principal amount of Secured Notes
agreeing to exchange their Secured Notes in the exchange offer, holders of at
least $13 million principal amount of Secured Notes agreeing to sell their
Secured Notes pursuant to the tender offer, and the Company's receipt of $40
million of new senior secured financing on terms acceptable to it. Secured
Notes aggregating $25,000 in principal amount have been tendered pursuant to the
tender offer as of 5:00 p.m. on June 20, 1996. Holders of approximately $64.8
million (approximately 64%) of the Secured Notes have informed the Company that
they endorse or intend to exchange their Secured Notes in the modified Exchange
Offer. However, pending the release of the announcement attached as
2
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Exhibit 99.1 hereto, certain potential exchanging noteholders have not been
informed of the modified terms of the Exchange Offer. Consummation of the
restructuring will require the combined participation of holders of not less
than $94.4 million (approximately 92.9%) in aggregate principal amount of the
Secured Notes in the Tender Offer and the Exchange Offer. The Company is engaged
in discussions with several financial institutions with respect to the senior
secured financing but has not yet received a commitment for such financing.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
EXHIBITS
NO. DESCRIPTION
- --- -----------
99.1 Press Release, dated June 21, 1996.
99.2 Supplement to the Offer to Purchase, dated June 21, 1996.
[SIGNATURE ON THE NEXT PAGE]
3
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SIGNATURE
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 hereunto duly authorized.
Dated: June 25, 1996
USTRAILS INC.
By:/s/ Walter B. Jaccard
---------------------
Walter B. Jaccard
Vice President
4
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EXHIBIT INDEX
PAGE
NO. DESCRIPTION NO.
- --- ----------- ----
99.1 Press Release, dated June 21, 1996....................... 6
99.2 Supplement to the Offer to Purchase, dated June 21, 1996. 8
_____________________
5
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EXHIBIT 99.1
PRESS RELEASE
-------------
Dallas, Texas, June 21, 1996 -- USTrails Inc. [OTC:USTQ] announced today
that it has modified the terms of its proposed restructuring of its outstanding
Secured Notes. USTrails is increasing its offer to purchase for cash up to
$20.1 million aggregate principal amount of Secured Notes to $780 per $1,000 of
principal amount, plus accrued interest of $60, from $740 per $1,000 of
principal amount. USTrails also is extending the tender offer to expire at
12:00 midnight, Friday July 5, 1996, unless further extended. The tender offer
was previously scheduled to expire at 12:00 midnight, Tuesday, July 2, 1996.
Additionally, the Company will now pay a solicitation fee of $15 per $1,000
in principal amount of Secured Notes to any broker or dealer in securities which
is a member of any national securities exchange or of the NASD, foreign brokers
or dealers which agree to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States or any bank or trust company for
soliciting and obtaining the tender of Secured Notes accepted in the tender
offer.
The Company has also modified the terms of its proposed private offer to
certain holders of the Secured Notes to exchange their Secured Notes for a
combination of cash and newly issued debt and equity securities. As approved by
USTrails' Board of Directors, assuming the minimum required exchange of $81.3
million principal amount of Secured Notes, holders participating in the exchange
offer will receive pursuant to the modified terms of the exchange offer in the
aggregate $32.5 million in cash, $40 million in principal amount of newly issued
12% Senior Subordinated Pay-In-Kind Notes due 2003 and 3,658,500 shares of the
Company's common stock, $.01 par value per share, representing approximately 50%
of the outstanding Common Stock after giving effect to the restructuring. In
addition, accrued interest of $60 through July 15, 1996 per $1,000 of principal
amount will be paid in cash. The aggregate exchange consideration will be
exchanged in a ratio of $400 in cash, $492 in principal amount of Senior
Subordinated PIK Notes and 45 shares of the Company's Common Stock for each
$1,000 in principal amount of Secured Notes.
As a condition to the exchange offer, each exchanging noteholder will be
required to agree not to tender the Secured Notes held by it pursuant to the
tender offer but only to exchange the Secured Notes held by it pursuant to the
exchange offer. The Company has contacted all holders of Secured Notes that may
be involved in the exchange offer. The offering of these securities will not be
registered under the Securities Act of 1933, as amended and the securities may
not be reoffered or sold absent registration or an applicable exemption from the
registration requirements of the Act. This press release does not constitute an
offer to sell, or the solicitation of an offer to buy any of the securities
subject to the exchange offer.
The exchange offer and the tender offer are conditioned upon, among other
things, holders of at least $81.3 million principal amount of Secured Notes
agreeing to exchange their Secured Notes in the exchange offer, holders of at
least $13 million principal amount of Secured Notes
<PAGE>
agreeing to sell their Secured Notes pursuant to the tender offer, and USTrails'
receipt of $40 million of new senior secured financing on terms acceptable to
it. Secured Notes aggregating $25,000 in principal amount have been tendered
pursuant to the tender offer as of 5:00 p.m. on June 20, 1996. Holders of
approximately $64.8 million (approximately 64%) of the Secured Notes have
informed USTrails that they endorse or intend to exchange their Secured Notes in
the modified Exchange Offer. However, pending this announcement certain
potential exchanging noteholders have not been informed of the modified terms of
the Exchange Offer. Consummation of the restructuring will require the combined
participation of holders of not less than $94.4 million (approximately 92.9%) in
aggregate principal amount of the Secured Notes in the Tender Offer and the
Exchange Offer. The Company is engaged in discussions with several financial
institutions with respect to the senior secured financing but has not yet
received a commitment for such financing.
As previously disclosed, the purpose of the restructuring is to retire the
Secured Notes not later than the payment date for the $24.7 million of principal
and interest due July 15, 1996 and to create a capital structure for USTrails
consistent with its current business plan. USTrails believes a recapitalization
or reorganization is required to address its future requirements for the Secured
Notes.
USTrails, through its subsidiaries Thousand Trails, Inc. and National
American Corporation (NACO), owns and operates a system of 58 membership-based
campgrounds, which is one of the largest private campground systems in the
United States. USTrails also manages timeshare facilities and owns certain real
estate at eight full service resorts and provides a reciprocal use program for
members of approximately 330 recreational facilities.
###
For further information contact:
Harry J. White, Jr. (214) 243-2228
<PAGE>
EXHIBIT 99.2
SUPPLEMENT TO OFFER TO PURCHASE
USTRAILS INC.
HAS INCREASED THE PURCHASE PRICE OF ITS
OFFER TO PURCHASE FOR CASH
UP TO $20,161,000 AGGREGATE PRINCIPAL AMOUNT
OF
USTRAILS INC. 12% SECURED NOTES DUE 1998 AND ADDITIONAL SERIES 12%
SECURED NOTES DUE 1998
TO $780, PLUS $60 ACCRUED INTEREST THROUGH JULY 15, 1996,
PER $1,000 OF PRINCIPAL AMOUNT
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THIS OFFER AND THE WITHDRAWAL RIGHTS WITH
RESPECT HERETO HAVE BEEN EXTENDED TO 12:00 MIDNIGHT, EASTERN TIME,
ON FRIDAY, JULY 5, 1996, UNLESS FURTHER EXTENDED.
- --------------------------------------------------------------------------------
Secured Noteholders who have previously tendered Secured Notes and not
validly withdrawn the Secured Notes and who wish to have the tendered Secured
Notes purchased pursuant to this Offer need not take any further action, except
for complying with the procedure for guaranteed delivery if that procedure is
being used.
Any Secured Noteholder desiring to tender all or some of its Secured Notes
should complete and sign the Letter of Transmittal in accordance with the
instructions therein and in the Offer to Purchase, dated June 5, 1996 (the
"Offer to Purchase"), of USTrails Inc. and deliver it along with the
certificates for such Secured Notes and any other required documents to the
Depositary at one of the addresses set forth on the back cover of this
Supplement to Offer to Purchase (this "Supplement"). Alternatively, a financial
institution may be able to tender its Secured Notes pursuant to the book-entry
transfer procedures set forth in the Offer to Purchase. If a Secured Noteholder
cannot comply with such procedures, it may tender its Secured Notes through the
guaranteed delivery procedures set forth in the Offer to Purchase. A holder of
Secured Notes registered in the name of a bank, broker, custodian, fiduciary,
nominee, securities dealer, trust company, or other person must contact such
person if it desires to tender its Secured Notes and request such other person
to effect the transaction on its behalf. Tendering Secured Noteholders may use
the Letter of Transmittal and Notice of Guaranteed Deliver previously
distributed to Secured Noteholders with the Offer to Purchase or the Letter of
Transmittal and Notice of Guaranteed Deliver included with this Supplement.
This Offer is being made in connection with the Company's proposed
restructuring of the outstanding debt represented by the Secured Notes. If the
Company's attempt to restructure is unsuccessful, the Company may seek relief
under the United States Bankruptcy Code or attempt to operate at significantly
reduced levels, either of which the Company believes will materially adversely
affect its ongoing operations and asset recoveries.
(cover continued on next page)
___________________________
NEITHER THIS OFFER NOR THE RESTRUCTURING TRANSACTION HAS BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
AUTHORITY NOR HAS THE COMMISSION OR ANY SUCH AUTHORITY PASSED UPON THE FAIRNESS
OR MERITS OF THIS OFFER OR THE RESTRUCTURING TRANSACTION NOR UPON THE ACCURACY
OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
___________________________
The Information Agent for this Offer is:
HILL & KNOWLTON, INC.
June 21, 1996
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The Company has proposed that certain Secured Noteholders exchange all
Secured Notes held by them for a combination of cash and newly issued debt and
equity securities of the Company. Each Secured Noteholder participating in the
Exchange Offer will be required as a condition of the exchange to agree not to
tender its Secured Notes pursuant to this Offer but only to exchange them
pursuant to the Exchange Offer.
Consummation of this Offer is conditioned upon, among other things, (i)
there being validly tendered pursuant to this Offer and not withdrawn prior to
the Expiration Date not less than $13,000,000 (approximately 12.8%) in aggregate
principal amount of Secured Notes, (ii) the exchange by Exchanging Noteholders
of Secured Notes representing at least $81,300,000 (approximately 80.1%) in
aggregate principal amount of Secured Notes for cash and newly issued debt and
equity securities of the Company pursuant to the Exchange Offer and (iii)
receipt by the Company of senior secured financing on terms acceptable to it
that, with the Company's available cash, is sufficient to purchase the Secured
Notes tendered pursuant to this Offer, to consummate the Exchange Offer and to
redeem all untendered or unexchanged Secured Notes as contemplated by the
Restructuring Transaction. This Offer is also subject to other terms and
conditions. See "Certain Conditions of the Offer" in the Offer to Purchase.
Questions and requests for assistance and additional copies of this
Supplement, the Offer to Purchase and the Letter of Transmittal may be directed
to the Information Agent at its address and telephone number set forth on the
back cover of this Supplement.
<PAGE>
INTRODUCTION
The following information amends and supplements the information
contained in the Offer to Purchase, dated June 5, 1996, of USTrails Inc., a
Nevada corporation (the "Company"). The Company is now offering, upon the
terms and conditions set forth herein, in the Offer to Purchase and in the
related Letter of Transmittal, to purchase for cash up to $20,161,000
aggregate principal amount of its 12% Secured Notes Due 1998 and Additional
Series 12% Secured Notes Due 1998 (collectively, the "Secured Notes") that are
validly tendered and not withdrawn prior to the Expiration Date for a purchase
price of $780 per $1,000 of principal amount (the "Purchase Price"), plus $60
accrued interest through July 15, 1996. Interest through July 15, 1996 will
be paid to holders of record of the Secured Notes as of July 1, 1996. If any
Secured Note is transferred after July 1, 1996, no interest will be paid to
the transferee. This offer (this "Offer") is subject to the terms and
conditions set forth in the Offer to Purchase, this Supplement, and in the
related Letter of Transmittal (the "Letter of Transmittal"). The Offer and
the withdrawal rights with respect thereto have been extended to 12:00
midnight, Eastern Time, on Friday, July 5, 1996, or if further extended, the
time and date to which the Company has extended this Offer. All capitalized
terms used herein and not otherwise defined herein shall have the meanings set
forth in the Offer to Purchase.
QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES OF THIS
SUPPLEMENT, THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL MAY BE
DIRECTED TO THE INFORMATION AGENT AT ITS ADDRESS AND TELEPHONE NUMBER SET
FORTH ON THE BACK COVER OF THIS SUPPLEMENT. SECURED NOTEHOLDERS ARE URGED TO
READ THIS SUPPLEMENT, THE OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL CAREFULLY BEFORE DECIDING TO TENDER THEIR SECURED NOTES.
INCREASED CONSIDERATION
In addition to increasing the Purchase Price to $780 per $1,000 of
principal amount, plus $60 accrued interest through July 15, 1996, the Board
of Directors has modified the Exchange Consideration such that Exchanging
Noteholders will receive $400 in cash, $492 in principal amount of Senior
Subordinated PIK Notes and 45 shares of the Company's Common Stock for each
$1,000 in principal amount of Secured Notes. Junior Subordinated PIK Notes
have been excluded from the Exchange Consideration. The following table
summarizes the consideration to be received by Tendering Noteholders and by
Exchanging Noteholders, in each case per $1,000 in principal amount of Secured
Notes, pursuant to the modified terms of the Restructuring Transaction
approved by the Board of Directors.
TENDERING EXCHANGING
CONSIDERATION NOTEHOLDERS NOTEHOLDERS
------------- ----------- -----------
Cash $780.00 $400.00
Accrued interest in cash $ 60.00 $ 60.00
------- -------
Total cash $840.00 $460.00
Principal amount of Senior $492.00
Subordinated PIK Notes
Common Stock 45 shares
1
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STEERING COMMITTEE ENDORSEMENT/ NOTEHOLDER SUPPORT
The Steering Committee has endorsed the modified terms of the
Restructuring Transaction. To date, Secured Noteholders, including CM
Strategic, SC Fundamental, IAT Reinsurance Syndicate, Ltd., Post Advisory
Group, and Third Avenue Fund and other affiliates and associates of Martin J.
Whitman, which hold $64.8 million in principal amount of Secured Notes
(representing 64% of the Secured Notes outstanding), have advised the Company
that they intend to exchange their Secured Notes in the modified Exchange
Offer. However, pending announcement of the terms of the modified
Restructuring Transaction, certain potential Exchanging Noteholders have not
yet been contacted regarding the modified terms of the Exchange Offer.
SUMMARY CAPITALIZATION
The following table summarizes the capital structure of the Company as of
June 30, 1996 (i) estimated without consummation of the Restructuring
Transaction and (ii) pro forma for the consummation of the modified
Restructuring Transaction, assuming receipt of the Senior Secured Credit
Facility and satisfaction of the Minimum Exchange Condition and Minimum Tender
Condition.
AS OF JUNE 30, 1996
(DOLLARS IN THOUSANDS)
-----------------------
ESTIMATED PRO FORMA
----------- ----------
Cash $ 33,380 $ 5,125
========== ==========
Secured Notes, gross 101,461
Debt discount (7,096)
----------
Secured Notes, net 94,365
Senior Secured Credit Facility 30,000
Other mortgages 940 940
Senior Subordinated PIK Notes 40,000
Deferred gain on exchange to be
classified as additional subordinated
debt under FAS 15 2,054
Total debt $ 95,305 $ 72,994
========== ==========
Shares of Common Stock outstanding (1) 3,702,726 7,361,226
- ----------
(1) Does not include warrants to purchase 484,835 and 10,087 shares of Common
Stock at $4.24 and $1.62 per share, respectively, and options to purchase
305,000 shares of Common Stock under the Company's stock option plans at
various prices.
SOLICITING DEALERS
The Company will pay to a Soliciting Dealer (as defined herein) a
solicitation fee of $15 per $1,000 aggregate amount of Secured Notes validly
tendered and accepted pursuant to this Offer. A "Soliciting Dealer" includes
any of the following which has solicited and obtained a tender pursuant to
this Offer: (i) any broker or dealer in securities who is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. ("NASD"); (ii) any foreign broker or dealer not eligible for
membership in the NASD who agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member; or (iii) any bank or trust company. No such
fee shall be payable to a Soliciting Dealer in respect of Secured Notes
registered in the name of such Soliciting Dealer unless such Secured Notes are
held by such Soliciting Dealer as nominee and
2
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such Secured Notes are being tendered for the benefit of one or more
beneficial owners identified on the Letter of Transmittal or on the Notice of
Solicited Tenders (included in the materials provided to brokers and dealers).
If tendered Secured Notes are being delivered with a Letter of
Transmittal, the Letter of Transmittal must designate the Soliciting Dealer as
such in the box captioned "Solicited Tenders." If tendered Secured Notes are
being delivered by book-entry transfer made to an account maintained by the
Depositary, the Soliciting Dealer must return a Notice of Solicited Tenders to
the Depositary within three Business Days after the Expiration Date in order
to receive a solicitation fee. No solicitation fee shall be payable to the
Soliciting Dealer with respect to the tender of Secured Notes by the holder of
record, for the benefit of the beneficial owner, unless the beneficial owner
has designated the Soliciting Dealer as such.
EFFECT OF UNSUCCESSFUL RESTRUCTURING
If the Company's attempt to restructure is unsuccessful, management
believes that the resources available to the Company may be insufficient both
to meet the continuing operating needs of the Company in accordance with the
Business Plan and to make the mandatory sinking fund and interest payments due
on July 15, 1996. Under the terms of the Indenture, if the Company fails to
make a payment of principal or interest or defaults under the financial
covenants, it is prohibited from making withdrawals from its cash accounts
except for a one-time withdrawal of up to $5 million, which would be
insufficient to meet the business needs of the Company during the summer
season, the period of highest demand for working capital. Under such
circumstances the Company may seek relief under the United States Bankruptcy
Code or attempt to operate at significantly reduced levels and recapitalize or
reorganize at a later date. The Company believes that its ongoing operations,
particularly collections of contracts receivable and membership dues and sales
efforts, will be materially adversely affected by either the commencement of
bankruptcy proceedings or continued operations at significantly reduced
levels. As a result, there can be no assurance that a bankruptcy
reorganization or a later recapitalization or reorganization would not be
significantly less favorable to the Secured Noteholders than the proposed
Restructuring Transaction.
BACKGROUND TO THIS OFFER
EVENTS LEADING TO RESTRUCTURING
The discussion set forth in this subsection of the Offer to Purchase is
hereby supplemented as follows:
Subsequent to commencement of this Offer on June 5, 1996 (the
"Commencement Date"), the Company and CIBC Wood Gundy continued to meet with
representatives of the Steering Committee, CM Strategic and other potential
Exchanging Noteholders to discuss the Exchange Consideration. The Company has
also evaluated the response of the Secured Noteholders to this Offer.
On June 18, 1996, the Special Committee met to consider the terms of the
Restructuring Transaction and the continuing discussions with the Steering
Committee and other potential Exchanging Noteholders. At the meeting, CIBC
Wood Gundy indicated that, based on its discussion with potential Exchanging
Noteholders, the Restructuring Transaction would be perceived more favorably
by the Secured Noteholders if the principal amount of the Senior Subordinated
PIK Notes and the number of shares of Common Stock to be received by
Exchanging Noteholders were increased, the Junior Subordinated PIK Notes
eliminated from the Exchange Consideration and the Purchase Price increased.
The Special Committee then discussed with Mr. Boas, among other things, the
position of CM Strategic with respect to modified terms
3
<PAGE>
of the Restructuring Transaction. After Mr. Boas and representatives of CIBC
Wood Gundy departed, the Special Committee discussed CIBC Wood Gundy's
presentation with management and RPR and received management's recommendations
as to modified terms of the Restructuring Transaction. The Special Committee
preliminarily determined to modify the Exchange Consideration to increase the
aggregate amount of Senior Subordinated PIK Notes and the number of shares of
Common Stock to be issued in the Exchange Offer, assuming satisfaction of the
Minimum Exchange Condition, to $40 million in aggregate principal amount and
3,658,500 shares, respectively, and to exclude the Junior Subordinated PIK
Notes from the Exchange Consideration, and to increase the Purchase Price to
$780 per $1,000 in aggregate principal amount of Secured Notes. The Special
Committee then received an oral opinion from RPR that (i) the Restructuring
Transaction, as proposed to be modified, was fair from a financial point of
view to the holders of Common Stock and (ii) that the proposed increased
Purchase Price was reasonably equivalent to the proposed modified Exchange
Consideration. In rendering its opinion, RPR, among other things, reviewed the
proposed modified terms of the Restructuring Transaction and reconsidered and
updated the factors it had considered in rendering its previous opinion. The
Special Committee then unanimously approved recommending the modified
Restructuring Transaction to the Board of Directors.
On June 18, 1996, the Board of Directors met to consider the proposed
modified Restructuring Transaction. The Board reviewed the transaction, the
status of this Offer and the state of discussions with the Steering Committee,
CM Strategic and other potential Exchanging Noteholders. The Special
Committee provided its recommendation of the modified Restructuring
Transaction to the Board of Directors. The Board then unanimously approved
the modified Restructuring Transaction, with Mr. Boas abstaining due to the
ownership of Secured Notes by his affiliate, CM Strategic. The Board
reaffirmed the principal factors it identified in its approval of the
Restructuring Transaction at its June 3, 1996 meeting. The Board also
considered the impact of the modified Restructuring Transaction on the
Business Plan, including the additional leverage and cash requirements, but
concluded that the modified consideration provided the greatest opportunity
for a successful restructuring without further negotiation.
The Steering Committee has endorsed the modified terms of the
Restructuring Transaction. To date, Secured Noteholders, including CM
Strategic, SC Fundamental, IAT Reinsurance Syndicate, Ltd., Post Advisory
Group, and Third Avenue Fund and other affiliates and associates of Martin J.
Whitman, which hold $64.8 million in principal amount of Secured Notes
(representing 64% of the Secured Notes outstanding), have advised the Company
that they intend to exchange their Secured Notes in the modified Exchange
Offer. However, pending announcement of the terms of the modified
Restructuring Transaction, certain potential Exchanging Noteholders have not
yet been contacted regarding the modified terms of the Exchange Offer.
SPECIAL CONSIDERATIONS
The discussion in this subsection of the Offer to Purchase is hereby
supplemented as follows:
MODIFIED RESTRUCTURING TRANSACTION
The Special Committee recommended the modified terms of the Restructuring
Transaction to the Board of Directors based, in part, upon the conclusion of
RPR that the increased Purchase Price is reasonably equivalent to the modified
Exchange Consideration. The report of RPR is attached hereto as Exhibit A.
There can be no assurance, however, as to the actual value of the Exchange
Consideration.
4
<PAGE>
RECENT PRICES
The Company believes bid prices for the Secured Notes since the
Commencement Date have been in the range of $750 to $762.50 per $1,000 of
principal amount. There can be no assurance that these bids are accurate
indications of prices available to willing sellers. The Company believes such
prices may not have been effectively available to non-institutional investors
because of related transaction costs. On June 20, 1996, the closing bid
quotation per share of Common Stock was $0.50. The foregoing Common Stock bid
quotation is as quoted through the NASD OTC Bulletin Board and the National
Quotation Bureau's Pink Sheets. Such quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.
CURRENT BUSINESS PLAN
The Business Plan has been revised to give effect to the modified terms
of the Restructuring Transaction. Additionally, the Business Plan has also
been revised (i) based on the Company's discussions with potential lenders, to
increase the assumed rate of interest on the Senior Secured Credit Facility,
(ii) to increase the transaction expenses incurred by the Company in
connection with the Restructuring Transaction and (iii) to reflect the
Company's present expectation of a positive contribution from operations for
fiscal 1996 of approximately $4.9 million, due to higher than expected
campground dues and lower campground operating expenses, partially offset by
lower ancillary revenue programs. The revised Business Plan is attached as
Exhibit B (the "Revised Business Plan"). The revised Business Plan should be
read in its entirety in conjunction with the financial statements of the
Company set forth in its Annual Report and Quarterly Report delivered with the
Offer to Purchase, as it forms the primary assumptions upon which the Board of
Directors and its advisors formulated the modified Restructuring Transaction.
The Company's projected results under the Revised Business Plan are not
historical, except in the case of the first three quarters included in fiscal
1996, and involve significant risks and uncertainties. The Company's future
results of operations and financial condition may differ materially due to
several factors, including but not limited to the Company's continued ability
to control costs, its ability to implement its sales and marketing plan, the
actual rate of decline in the campground membership base, the actual use of
the campgrounds by members and guests, the actual timing and completion of
planned asset sales, the actual collection experience of the Company's
contracts receivable, future interest rates and the other factors affecting
the Restated Business Plan as set forth in this Supplement, the Offer to
Purchase and the Annual Report and Quarterly Report delivered with the Offer
to Purchase. Accordingly, such projections are not necessarily indicative of
the future performance of the Company and should not be regarded as
representations that such results will be achieved.
TERMS OF THE RESTRUCTURING TRANSACTION
GENERAL
The discussion in this subsection of the Offer to Purchase is hereby
supplemented as follows:
Under the terms of the modified Restructuring Transaction, the Company is
seeking to exchange with the Exchanging Noteholders, each of whom will
represent to the Company that it is an Accredited Investor, their Secured
Notes for a combination of cash, newly issued Senior Subordinated PIK Notes
and Common Stock (the "Exchange Consideration"). Junior Subordinated PIK
Notes have been eliminated from the Exchange Consideration. The Company is
offering to purchase the remaining Secured Notes on the terms and conditions
stated in the Offer to Purchase, as amended and supplemented by the Supplement
and the related Letter of Transmittal.
5
<PAGE>
EXCHANGE OFFER
The discussion in this subsection of the Offer to Purchase is hereby
supplemented as follows:
Assuming that $81.3 million in principal amount of Secured Notes are
exchanged in the Exchange Offer, Exchanging Noteholders will receive in the
aggregate $32.5 million in cash, $40 million in principal amount of newly
issued Senior Subordinated Pay-In-Kind Notes due 2003 (the "Senior
Subordinated PIK Notes") and 3,658,500 shares of the Company's common stock,
$.01 par value per share (the "Common Stock"), representing approximately 50%
of the outstanding Common Stock (after giving effect to the Restructuring
Transaction). The aggregate Exchange Consideration will be exchanged in a
ratio of $400 in cash, $492 in principal amount of Senior Subordinated PIK
Notes and 45 shares of the Company's Common Stock for each $1,000 in principal
amount of Secured Notes. Accrued interest of $60 per $1,000 of principal
amount through July 15, 1996 will be paid in cash. For a description of the
Senior Subordinated PIK Notes see "Terms of the Restructuring Transaction -
Exchange Offer" in the Offer to Purchase.
A significant potential Exchanging Noteholder has indicated that, in
order to meet its internal requirements and participate in the Exchange Offer,
a portion of the interest on the Senior Subordinated PIK Notes must be prepaid
in cash. In order to meet this need, a portion of the $400 cash component of
the Exchange Consideration will represent prepaid interest on the newly issued
Senior Subordinated PIK Notes, and adjustments will be made to the Senior
Subordinated PIK Notes to maintain economic equivalence to the Exchange
Consideration as approved by the Board of Directors.
EFFECT ON STOCKHOLDERS
The discussion in this subsection of the Offer to Purchase is hereby
supplemented as follows:
After giving effect to the modified Restructuring Transaction, assuming
satisfaction of the Minimum Exchange Condition, holders of Common Stock who
are not also Exchanging Noteholders receiving Common Stock would be reduced
from approximately 40.0% of outstanding Common Stock to 20.1% of the
outstanding Common Stock. Exchanging Noteholders would receive shares
representing approximately 50% of the outstanding Common Stock. The
beneficial ownership of CM Strategic, the Company's largest stockholder, will
be reduced from approximately 45.5% to 38.1% of the outstanding Common Stock.
See "Interests of Management and Others" in the Offer to Purchase.
THE DESCRIPTION OF THE EXCHANGE OFFER AND OTHER REFERENCES TO THE
EXCHANGE OFFER IN THE OFFER TO PURCHASE AND THE SUPPLEMENT ARE FOR
INFORMATIONAL PURPOSES ONLY. SECURED NOTEHOLDERS WHO ARE POTENTIAL EXCHANGING
NOTEHOLDERS HAVE BEEN CONTACTED PRIOR TO THE COMMENCEMENT DATE. NO OTHER
SECURED NOTEHOLDERS WILL BE CONTACTED WITH RESPECT TO THE EXCHANGE OFFER.
THIS OFFER DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY OF THE EXCHANGE CONSIDERATION TO BE ISSUED IN CONNECTION
WITH THE EXCHANGE OFFER, WHICH WILL ONLY BE OFFERED OTHERWISE BY THE COMPANY
TO THE EXCHANGING NOTEHOLDERS ABSENT REGISTRATION UNDER AND PURSUANT TO
AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS.
6
<PAGE>
SOURCE AND AMOUNT OF FUNDS
GENERAL
The discussion in this subsection of the Offer to Purchase is hereby
supplemented as follows:
The maximum amount required by the Company to purchase the Secured Notes
pursuant to this Offer, to consummate the Exchange Offer and to redeem the
untendered and unexchanged Secured Notes, and for related fees and expenses,
is approximately $58.4 million. The Company estimates that it will have
available approximately $28.4 million from its working capital to be used in
connection with the Restructuring Transaction. Since commencing this Offer,
the Company has engaged in discussions with various lenders to secure the
proposed Senior Secured Credit Facility, but has not yet received a commitment
for such financing.
INTERESTS OF MANAGEMENT AND OTHERS
The discussion in the third paragraph of this section of the Offer to
Purchase is hereby supplemented as follows:
After giving effect to the modified Restructuring Transaction, the
305,000 options outstanding under the Company's 1991 Employee Stock Incentive
Plan, 1993 Stock Option and Restricted Stock Purchase Plan and 1993 Director
Stock Option Plan will represent approximately 4.1% of such outstanding Common
Stock.
7
<PAGE>
HISTORICAL AND PRO FORMA CAPITALIZATION
The discussion in this section of the Offer to Purchase is hereby amended
and restated in its entirety as follows:
The following table sets forth the historical capitalization of the
Company at March 31, 1996 and the pro forma capitalization of the Company
immediately following implementation of the modified Restructuring Transaction
assuming it occurred on July 1, 1994, the first day of the most recent full
fiscal year, and assuming satisfaction of the Minimum Tender Condition and
Minimum Exchange Condition. This table should be read in conjunction with the
pro forma financial data set forth in "Selected and Pro Forma Financial Data"
of the Supplement. For a summary of the capitalization of the Company after
giving effect to the Restructuring Transaction, see "Introduction - Summary
Capitalization" of the Supplement.
MARCH 31, 1996
-------------------------
HISTORICAL PRO FORMA
------------ -----------
(unaudited, in thousands)
Secured Notes (due July 15, 1998; $18,599,000 currently
redeemable on each of July 15, 1996 and 1997), gross $101,454
Secured Notes, discount (1) (8,163)
--------
Secured Notes, net 93,291
Senior Secured Credit Facility
Real estate mortgages (due through June 2009) 1,923 $ 1,923
Senior Subordinated PIK Notes, at face 48,030
Subordinated debt, FAS 15 (2) 1,341
-------- --------
Total Borrowings 95,214 51,294
-------- --------
Preferred stock, $.01 par value, 1,500,000 shares
authorized, none issued and outstanding
Common Stock, $.01 par value, 15,000,000 shares
authorized, 3,702,726 shares issued
and outstanding, 7,361,226 pro forma as
adjusted (3) 37 56
Additional paid-in capital 17,549 19,381
Accumulated deficit (41,138) (28,640)
-------- --------
Total Stockholders' Deficit (23,798) (9,203)
-------- --------
Total Capitalization $ 71,539 $ 42,091
======== ========
- ----------
(1) In accordance with generally accepted accounting principles, the Company
recorded a discount to the principal amount of the Secured Notes when it
issued them because the market yield on the Secured Notes significantly
exceeded their stated interest rate. Each month the Company expenses a
portion of this discount as interest expense.
(2) In accordance with generally accepted accounting principles, the Company
will not record a gain on the Restructuring Transaction. Rather, the
amount which would have otherwise been recorded as a gain will be recorded
as a subordinated obligation which will be amortized over the estimated
payout period of the obligation to reduce future interest expense on the
Senior Subordinated PIK Notes issued in the Restructuring Transaction.
(3) Does not include warrants to purchase 484,835 and 10,087 shares of Common
Stock at $4.24 and $1.62 per share, respectively, and options to purchase
305,000 shares of Common Stock under the Company's stock option plans at
various prices.
8
<PAGE>
SELECTED AND PRO FORMA FINANCIAL DATA
The discussion in this section of the Offer to Purchase is hereby amended
and restated in its entirety as follows:
The pro forma financial data contained in this Offer to Purchase, as
supplemented by the Supplement, gives effect to the modified Restructuring
Transaction as if it had occurred as of the beginning of the periods
presented. The pro forma balance sheet information contained in this Offer to
Purchase, as supplemented by the Supplement, gives effect to the modified
Restructuring Transaction as if it occurred on July 1, 1994, the first day of
the most recent full fiscal year.
The consummation of this Offer and the consummation of the Exchange Offer
are conditioned upon each other. However, it is impossible to predict the
exact aggregate principal amount of Secured Notes that may be tendered and
accepted for payment in this Offer or exchanged in the Exchange Offer.
Therefore, the Company cannot predict whether the consummation of the
Restructuring Transaction will conform to the assumptions used in the
preparation of the pro forma financial data. In analyzing the pro forma
financial data and other information contained in this Offer to Purchase and
the Supplement, Secured Noteholders should consider that the Restructuring
Transaction as actually consummated could differ from the assumptions relating
thereto. Notwithstanding the foregoing, the Company believes that the
assumptions made with respect to such events provide a reasonable basis on
which to present the pro forma financial data.
THE PRO FORMA FINANCIAL DATA PRESENTED HEREIN DO NOT PURPORT TO REPRESENT
WHAT THE COMPANY'S RESULTS OF OPERATIONS OR FINANCIAL POSITION WOULD HAVE BEEN
HAD SUCH TRANSACTIONS IN FACT OCCURRED AT THE BEGINNING OF THE PERIODS OR TO
PROJECT THE COMPANY'S RESULTS OF OPERATIONS IN ANY FUTURE PERIOD. THE PRO
FORMA FINANCIAL DATA SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY, INCLUDING THE NOTES THERETO, INCORPORATED
BY REFERENCE IN THIS OFFER TO PURCHASE, AS SUPPLEMENTED BY THE SUPPLEMENT.
9
<PAGE>
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND SELECTED OPERATING DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED SIX
MARCH 31, JUNE 30, MONTHS
------------------------------------ ------------------------------------------------ ENDED
1996 1996 1995 1995 JUNE 30,
PRO FORMA(1) ACTUAL 1995 PRO FORMA(1) ACTUAL 1994 1993 1992
------------ ---------- ---------- ------------ ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONAL DATA:
Total revenue $ 69,977 $ 69,977 $ 69,633 $ 91,546 $ 91,546 $100,922 $ 98,189 $ 54,310
Membership dues 29,956 29,956 31,073 41,175 41,175 43,200 39,555 19,170
Other campground/resort
revenues 16,641 16,641 17,112 23,500 23,506 23,524 28,056 13,224
Membership and real
estate sales 2,798 2,798 3,159 4,228 4,228 3,975 4,427 6,442
Interest income 3,981 5,146 7,536 8,147 9,935 12,202 16,345 11,780
Interest expense 5,763 13,399 15,686 8,122 20,950 21,446 22,249 11,947
Income (loss) from
operations before
taxes, minority
interest, and
extraordinary item 11,321 4,771 (5,515) (873) (11,669) (5,967) (9,781) (23,195)
Extraordinary gain on
debt discharge 1,390 671 2,507
Net income (loss) 10,703 6,150 (5,730) (1,355) (11,920) (6,046) (7,582) (21,737)
Dividends paid (4)
Earnings (loss) per
share data:
Earnings (loss)
before extraordinary item 1.45 1.29 (1.55) (0.18) (3.22) (1.81) (2.73) (5.88)
Extraordinary item 0.37 0.16 0.68
Net income (loss) 1.45 1.66 (1.55) (0.18) (3.22) (1.63) (2.05) (5.88)
BALANCE SHEET DATA
(AT END OF PERIOD):
Cash and cash
equivalents (6) 5,125 36,255 47,924 5,125 60,696 50,059 44,359 32,989
Receivables, net 15,541 15,541 22,295 18,698 18,608 32,585 57,731 93,442
Campground properties 46,524 46,524 50,863 51,327 51,327 49,330 47,939 49,582
Resort properties 2,977 2,977 6,116 5,736 5,736 5,612 11,252 11,578
Total assets 78,310 110,331 137,548 89,180 135,886 148,164 170,067 196,788
Senior and Senior
Equivalent Notes, net
Secured Notes, net 93,291 114,282 115,490 110,854 115,389 123,511
Senior Secured Credit
Facility 19,334
Senior Subordinated
PIK Notes (7) 49,371 46,539
Total long term debt, net 43,460 75,928 96,879 48,462 98,308 115,877 121,889 130,210
Stockholders' equity
(deficit) (9,203) (23,675) (23,639) (19,902) (29,821) 17,912 (11,703) (4,151)
STATISTICAL DATA
(AT END OF PERIOD):
Campgrounds-
Number of operating
campgrounds 58 58 60 60 60 62 65 69
Number of members 131,000 131,000 142,000 136,000 136,000 149,000 157,000 165,000
Average annual dues
per member $ 324 $ 324 $ 327 $ 329 $ 329 $ 315 $ 290 $ 246
Average cost per
camper night $17.95 $17.95 $20.29 $19.69 $19.69 $18.36 $17.29 $16.55
Resorts-
Number of lot owners 1,100 1,100 5,200 5,100 5,100 50,000 5,100 5,000
Total timeshare weeks 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000
Timeshare weeks
available for sale 1,700 1,700 1,700 1,700 1,700 2,100 3,300 4,200
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR ENTITY
---------------------
SIX MONTHS YEAR
ENDED ENDED
DEC. 31, JUNE 30,
1991(2) 1991(3)
---------- --------
<S> <C> <C>
STATEMENT OF
OPERATIONAL DATA:
Total revenue $ 63,670 $ 20,754
Membership dues 20,345
Other campground/resort
revenues 13,401
Membership and real
estate sales 15,140
Interest income 12,090 20,165
Interest expense 13,578 15,361
Income (loss) from
operations before
taxes, minority 13,578 15,361
interest, and
extraordinary item 7,151 (8,495)
Extraordinary gain on
debt discharge
Net income (loss) 6,278 (8,405)
Dividends paid (4)
Earnings (loss) per
share data: (5) (5)
Earnings (loss)
before extraordinary item
Extraordinary item
Net income (loss)
BALANCE SHEET DATA
(AT END OF PERIOD):
Cash and cash
equivalents (6) 42,233 3,500
Receivables, net 119,318 137,023
Campground properties 58,552 54,199
Resort properties 12,530 12,632
Total assets 242,587 253,694
Senior and Senior
Equivalent Notes, net 150,675
Secured Notes, net 113,095
Senior Secured Credit
Facility
Senior Subordinated
PIK Notes (7)
Total long term debt, net 120,150 163,842
Stockholders' equity
(deficit) 17,586 (5,003)
STATISTICAL DATA
(AT END OF PERIOD):
Campgrounds-
Number of operating
campgrounds 69 69
Number of members 167,000 170,000
Average annual dues
per member $ 243
Average cost per
camper night
Resorts-
Number of lot owners 4,900 4,900
Total timeshare weeks 32,000 32,000
Timeshare weeks
available for sale 4,400 4,600
</TABLE>
<PAGE>
(1) The pro forma information presented assumes the Restructuring Transaction
occurred on July 1, 1994, the first day of the most recent full fiscal
year.
(2) "Fresh Start Reporting" under the provisions of SOP 90-7, "Financial
Reporting by Entities in Reorganization under the Bankruptcy Code," was
reflected as of December 31, 1991, in the above balance sheet captions.
As a result, the information for the years ended June 30, 1995, 1994 and
1993, and the six months ended June 30, 1992, was prepared as if the
Company is a new reporting entity and a black line is shown to separate it
from prior period information since it was not prepared on a comparable
basis.
(3) The Company acquired NACO and Trails on June 30, 1991. The captions
reflecting results of operations, therefore, do not include the operations
of NACO and Trails for the year ended June 30, 1991. The assets,
liabilities, and stockholders' equity (deficit) captions, however, reflect
the consolidation of the Company, NACO and Trails as of June 30, 1991, and
thereafter.
(4) The Company is prohibited from paying any cash dividends until the
repayment of its secured and subordinated indebtedness.
(5) Income (loss) per share is not meaningful due to reorganization and
revaluation entries and the issuance of a material amount of Common Stock
in a stock split and bankruptcy reorganization. At June 30, 1995, there
were 3,702,726 shares of Common Stock outstanding, compared with 1,000
shares immediately before the consummation of the reorganization on
December 31, 1991. Outstanding warrants and stock options are excluded
from the net loss per share computation as they would have reduced net
loss per share, which is anti-dilutive.
(6) Cash held by the Company and its wholly owned subsidiaries, other than
that required for operations, is generally deposited in accounts that are
pledged for the benefit of the holders of the Secured Notes.
(7) In accordance with generally accepted accounting principles, the Company
will not record a gain on the Restructuring Transaction. Rather, the
amount which would have otherwise been recorded as a gain will be recorded
as a subordinated obligation which will be amortized over the estimated
payout period of the obligation to reduce future interest expense on the
Senior Subordinated PIK Notes issued in the Restructuring Transaction.
<PAGE>
APPENDIX I
DEFINED TERMS
This appendix lists all of the defined terms in this Supplement and
indicates the page on which this Supplement defines them.
DEFINED TERMS PAGE
Commencement Date............................................. 3
Common Stock.................................................. 6
Company....................................................... 1
Exchange Consideration........................................ 5
Letter of Transmittal......................................... 1
NASD.......................................................... 2
Offer......................................................... 1
Offer to Purchase............................................. cover page
Purchase Price................................................ 1
Revised Business Plan......................................... 5
Secured Notes................................................. 1
Senior Subordinated PIK Notes................................. 6
Soliciting Dealer............................................. 2
Supplement.................................................... cover page
I-1
<PAGE>
EXHIBIT A
OPINION OF RAUSCHER PIERCE REFSNES, INC.
A-1
<PAGE>
EXHIBIT A
[Letterhead of Rauscher Pierce Refsnes, Inc. appears here.]
June 18, 1996
Special Committee of the
Board of Directors
USTrails Inc.
Suite 200
2711 LBJ Freeway
Dallas, Texas 75234
Gentlemen:
We understand that USTrails Inc. (the "Company") proposes to restructure its
outstanding 12% Secured Notes Due 1998 and Additional Series 12% Secured Notes
Due 1998 (the "Secured Notes") through an offer to purchase for cash up to
$20,161,000 aggregate principal amount of Secured Notes (the "Tender Offer") and
an offer to exchange for cash and newly issued debt and equity securities
certain other Secured Notes (the "Exchange Offer"), as more fully described in
the Offer to Purchase dated June 5, 1996, as amended and supplemented by the
Supplement to Offer to Purchase dated June 21, 1996. You have requested our
opinion as to whether the consideration to be paid in the Tender Offer is
reasonably equivalent to the consideration to be paid in the Exchange Offer.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company and the Offer to Purchase, as
amended and supplemented by the Supplement. We have also reviewed certain other
information, including financial forecasts, provided to us by the Company and
met with the Company's management to discuss the business and prospects of the
Company. We have also considered certain financial and market data of the
Company and such other information, financial studies, analyses and
investigations and financial economic and market criteria as we deemed relevant.
In connection with our review, we have not independently verified any of the
foregoing information. We have not made an independent evaluation or appraisal
of the assets of the Company. With respect to the Company's financial
projections, we have assumed that they have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the Company's
management as to the future financial performance of the Company, and we express
no opinion with respect to such forecasts or
A-2
<PAGE>
the assumption on which they are based. Our opinion is based upon circumstances
existing and disclosed to us as of the date hereof.
Based upon and subject to the foregoing, we are of the opinion that the
consideration to be paid in the Tender Offer is reasonably equivalent to the
consideration to be paid in the Exchange Offer.
Very truly yours,
/s/ Rauscher Pierce Refsnes, Inc.
RAUSCHER PIERCE REFSNES, INC.
A-3
<PAGE>
EXHIBIT B
USTRAILS INC. AND SUBSIDIARIES
BUSINESS PLAN
(REVISED TO REFLECT JUNE 21, 1996
MODIFICATION OF RESTRUCTURING TRANSACTION)
B-1
<PAGE>
USTRAILS INC. AND SUBSIDIARIES
BUSINESS PLAN
(REVISED TO REFLECT JUNE 21, 1996
MODIFICATION OF RESTRUCTURING TRANSACTION)
TABLE OF CONTENTS
ASSUMPTIONS..................................................... B-3
FINANCIAL STATEMENTS
Operating Statement........................................ B-8
Balance Sheet.............................................. B-9
Cash Flows Available....................................... B-10
B-2
<PAGE>
USTRAILS INC. AND SUBSIDIARIES
BUSINESS PLAN
(REVISED TO REFLECT JUNE 21, 1996
MODIFICATION OF RESTRUCTURING TRANSACTION)
SIGNIFICANT ASSUMPTIONS
GENERAL OVERVIEW
Set forth herein is the business plan (the "Business Plan") for USTrails Inc.
and subsidiaries ("USTrails" or the "Company") for the fiscal years ending June
30, 1996 through June 30, 2001. Historical financial statements for the years
ended June 30, 1994 and 1995 are also included. The Business Plan contemplates
downsizing the Company to a level appropriate to a stable membership base, the
collection of the remaining contracts receivable and the sale of non-core
assets. Because the Company's membership base is declining at a significant
rate, stabilization will require several years and sales significantly in excess
of current levels. Moreover, the timing and amount of asset sales cannot be
assured. As a consequence, the actual operating results achieved through
implementation of the Business Plan are uncertain and may vary significantly
from those set forth herein.
The Business Plan assumes that a restructuring (the "Restructuring") of the
Company's 12% senior secured notes due 1998 (the "Secured Notes") is consummated
on July 15, 1996. In the restructuring, holders of the Secured Notes will
receive approximately $50 million in cash, $40 million in new senior
subordinated pay-in-kind notes (the "Senior Subordinated PIK Notes"), and
approximately 50% of the common stock of the Company, plus accrued interest
($6.1 million through July 15, 1996). Furthermore, the Business Plan assumes
that the Company obtains a $40 million Senior Secured Credit Facility (the
"Senior Secured Credit Facility") to fund future working capital needs and a
portion of the cash payment to holders of the Secured Notes and pay related fees
and expenses.
The Business Plan also assumes the Company pays interest on the Senior Secured
Credit Facility at 10.75% per annum. For the first 4 years, interest on the
Senior Subordinated PIK Notes at 12% per annum will be paid in additional Senior
Subordinated PIK Notes (see also the "Senior Subordinated PIK Notes" assumption
on page B-6). After 4 years interest on the Senior Subordinated PIK Notes will
be paid in cash. Pro forma for the restructuring and the financing, the Company
is assumed to have $5 million of cash on hand and $71 million of funded debt
(including the $40 million of Senior Subordinated PIK Notes).
In addition, the Business Plan assumes that the Company continues to market and
sell memberships similar to those introduced in the spring of 1995. These
products, which allow purchasing members to select various access and usage
levels based on their individual needs, appear to be well received by certain
camping consumers. The Company's sales and marketing organizations and sales
processes have been enhanced, so that the Company is now able to sell more
memberships. Despite the increased membership sales assumptions, however, it is
assumed that the membership base will continue to decline until the year 2000,
as member attrition will continue due to the advanced age of the current
membership base and other normal reasons.
B-3
<PAGE>
An assumption is made for one major new product called the Cottage membership
whereby ten-year memberships will be sold beginning in fiscal 1997. The Cottage
membership entitles the purchasing member the right to a one-week per year
rental in an upscale rental trailer, plus other amenities. It is projected that
approximately 7,200 of these memberships will be sold between fiscal 1997 and
2001.
Other major assumptions provide that the Company will be able to continue
reducing both operating expenses and general and administrative expenses as the
membership base declines. These effects are partially offset by inflation which
is projected to occur at a rate of 3% per annum.
The overall improvements in results projected in the Business Plan are in large
part due to increased membership sales, ancillary revenues and the introduction
of a profitable cottage program. If these individual improvements do not occur,
the actual results will vary significantly from the Business Plan.
In addition, significant sales of non-core assets are included in fiscal 1997
through 2000. The sale of these non-core assets is subject to identifying buyers
willing to pay appraised value, and to addressing the rights of members at the
campgrounds projected to be withdrawn from the system and sold. The timing and
amounts of these sales could also vary significantly from the Business Plan.
BACKGROUND
USTrails owns and operates one of the largest privately owned campground systems
in the United States, with 58 campgrounds serving approximately 131,000 members
as of March 31, 1996. The Company also manages timeshare facilities and owns
certain real estate at eight full service resorts and provides a reciprocal use
program for members of approximately 330 recreational facilities.
Over the past four years, the Company has focused on stabilizing operations by
reducing costs, improving its overall services to members, and attempting to
increase revenues from its existing membership base. During the last year and
one-half, the Company has increased its sales and marketing efforts in order to
replenish its membership base. The Company's current strategy is to continue to
seek to improve its ongoing operations, enhance marketing efforts and determine
the appropriate level at which ongoing operations should be continued. In this
regard, the Company intends to down-size its business by implementing additional
cost reduction measures as its membership base continues to decline. The
Business Plan assumes that these cost reduction measures will include reduced
service levels at certain campgrounds, decreased general and administrative
expenses, and a reduction of the number of campgrounds in the system beginning
in fiscal 1997. The Company's current strategy also includes efforts to dispose
of assets not required for ongoing operations, such as land and other assets at
the campgrounds and full service resorts.
B-4
<PAGE>
SPECIFIC ASSUMPTIONS
DUES REVENUE AND MEMBERSHIP BASE
- --------------------------------
The Company's membership base has declined from 167,000 at December 31, 1991, to
131,000 at March 31, 1996 (22%), and the membership base is presently declining
at the rate of approximately 8% per year. Through increased sales and marketing
efforts, the Company believes that its declining membership base will stabilize
by fiscal 1999 at a level substantially below the current level (approximately
117,000 members). In addition, the membership agreements generally permit the
Company to increase annually the amount of each member's dues, subject to
specified limitations. The Business Plan includes the following assumptions
affecting dues revenue:
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
1996 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
# Members at Year-end 128,155 122,718 119,044 117,152 117,226 117,409
Average Dues at Year-end $ 336 $ 346 $ 356 $ 367 $ 378 $ 389
Dues Revenue (in 000's) $ 39,548 $ 37,139 $ 36,854 $ 37,098 $ 37,954 $ 39,146
</TABLE>
The Business Plan assumes the loss of members and dues revenue as a result of
campground closures as the Company downsizes.
SALES AND MARKETING EFFORTS
- ---------------------------
In April 1992, new membership sales were suspended because the Company's sales
program was operating at a loss and with negative cash flow. In the fall of
1992, the Company began to assist campground members desiring to sell their
memberships in the secondary market, and in May 1994, began selling new
campground memberships on a limited basis and testing new sales programs. Since
that time, the Company has been testing membership sales programs and revising
them based on results and its ongoing market research. Based on the results
from the summer of 1995, the Company believes that it will be able to increase
the level of membership sales in the future. The Business Plan anticipates that
the sales program will generate a positive contribution by fiscal 1998. The
following assumptions are made affecting sales revenue:
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
# Sales Units 3,005 4,454 6,054 7,949 10,030 10,795
Average Sales Price $ 873 $1,079 $1,141 $1,181 $ 1,223 $ 1,256
Sales Revenue (in 000's) $2,624 $4,805 $6,907 $9,387 $12,263 $13,561
</TABLE>
ANCILLARY CONTRIBUTION
- ----------------------
The Business Plan assumes that the ancillary revenue generated from the
campground operations will increase steadily during the periods presented and
that expenses will increase in a similar manner, maintaining a contribution
margin during the period of between 47% and 49%.
B-5
<PAGE>
CAMPGROUND OPERATING COSTS
- --------------------------
The Business Plan reflects a $4.1 million (10%) decrease in operating expenses
during the period presented from fiscal 1995 levels, as a result of service
reductions at certain campgrounds, campground closures and other operational
changes, offset by inflation. The Business Plan assumes that the cost reduction
measures will not materially impact the Company's ability to attract and retain
members at the projected levels.
FULL SERVICE RESORTS AND RPI
- ----------------------------
The Company anticipates that its operations at the full service resorts will
yield a positive contribution for the projected periods after fiscal 1997,
primarily from the timeshare management operations, and that RPI will produce a
positive contribution from its operations of $2.1 million for fiscal 1996, which
steadily increases during the subsequent periods presented as the result of the
introduction of a new program in fiscal 1997.
GENERAL AND ADMINISTRATIVE COSTS
- --------------------------------
The Company's general and administrative costs declined during fiscal 1994 and
1995, and are projected to decrease significantly in fiscal 1996 and 1997 over
fiscal 1995 levels. Cost savings will be achieved primarily through head count
reductions and other efficiencies realized in the various administrative
departments and significant cost reductions in the area of receivables billings
and collections in connection with the diminishing contracts receivable
portfolio.
INTEREST INCOME
- ---------------
Interest income represents the interest earned on the contracts receivable
portfolio as well as interest income earned on cash balances. As the majority of
the Company's current new membership sales are not being financed, the Company's
portfolio of contracts receivable is rapidly diminishing. The Business Plan
assumes that the outstanding gross balance of contracts receivable will decline
to $2.7 million by fiscal 2001 from a gross balance of $35.4 million at June 30,
1995. The interest earned on the contracts receivable will in turn decrease,
with interest income on the portfolio projected to decline from $7.4 million in
fiscal 1995 to $744,000 in fiscal 2001. The Business Plan assumes the Company
earns interest income on its cash balances at an annual rate of 4%.
SENIOR SUBORDINATED PIK NOTES
- -----------------------------
A significant potential exchanging noteholder has indicated that, in order to
meet its internal requirements and participate in the exchange offer, a portion
of the interest on the Senior Subordinated PIK Notes must be prepaid in cash.
In order to meet this need, a portion of the cash component of the exchange
consideration will represent prepaid interest on the newly issued Senior
Subordinated PIK Notes, and adjustments will be made to the Senior Subordinated
PIK Notes to maintain economic equivalence to the exchange consideration as
approved by the Board of Directors.
B-6
<PAGE>
The Restructuring meets the definition of a Troubled Debt Restructuring under
Financial Accounting Standards Number 15 - "Accounting by Debtors and Creditors
for Troubled Debt Restructurings" ("FAS 15"). Under FAS 15, no gain is
recognized in a troubled debt restructuring; rather the amount that would have
otherwise been recorded as a gain is recorded as a subordinated obligation which
is amortized over the estimated payout period of the Senior Subordinated PIK
Notes issued in the Restructuring to reduce future interest expense.
It is assumed that after the retirement of the Senior Secured Credit Facility,
excess cash will be invested in the repurchase of Senior Subordinated PIK Notes.
ASSET SALES
- -----------
The Company believes that it is reasonably likely that it will be able to sell,
without any material adverse effect from members rights, the five campgrounds
held for disposition under the Business Plan, which have an appraised value of
$2.3 million, and other unspecified campgrounds that are included for
disposition in the Business Plan, which have an appraised value of $8.9 million,
although there can be no assurance that these appraised values will be realized
or that sales can be completed on the schedule projected in the Business Plan.
However, some states, including California, Oregon, and Washington, have non-
disturbance statutes that place limitations on the ability of the owner of a
campground to sell or close, or a lienholder to foreclose a lien on, a
campground. In certain states, these statutes permit the sale, closure or
foreclosure if the holders of related memberships receive access to a comparable
campground. The campground mortgages that secure the Secured Notes contain
similar nondisturbance provisions. The impact of the rights of members under
these laws and non-disturbance provisions is uncertain and could adversely
effect the availability or timing of disposition opportunities or the ability of
the company to realize recoveries from asset disposition.
INCOME TAX CONSIDERATIONS
- -------------------------
It is assumed that the Restructuring occurs outside a bankruptcy proceeding and
does not involve a change in ownership under Section 382 of the Internal Revenue
Code of 1986, as amended. However, if that is not the case and a change in
ownership is deemed to have occurred, the Company's accumulated net operating
losses ("NOLs"), which approximated $54 million as of June 30, 1995, would be
diminished significantly or their annual utilization substantially limited.
If a change in ownership were to occur, the annual NOL usage limitation is
calculated based on the fair value of the Company's stock immediately prior to
the Restructuring. In this instance, the Company's NOLs would be virtually
eliminated, with only a nominal annual amount available to be used
over the 15-year carryforward period.
It should also be noted that NOL carryforwards can be utilized to shelter
federal income taxes of the company and its subsidiaries, but are subject to
additional limitations under various state laws; for example, the inability of a
subsidiary company to utilize USTrails NOL carryforwards. Therefore, the Company
projects that it will have to incur state income taxes based on its pre-tax
income.
B-7
<PAGE>
USTrails Inc.
BUSINESS PLAN BALANCE SHEETS
Historical through June 30, 1995, Business Plan Transfer
(Revised to Reflect June 21, 1996 Modification of Restructuring Transaction)
(Amounts in thousands)
<TABLE>
<CAPTION>
Actual June 30, Business Plan as of June 30,
--------------------- ---------------------------------------------------------------------
ASSETS 1994 1995 1996 1997 1998 1999 2000 2001
- ------ -------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash $ 50,059 $ 50,596 $33,526 $ 5,125 $ 5,125 $ 5,125 $ 5,125 $ 5,125
Restricted Cash 1,225 1,629 2,963 2,963 2,963 2,963 2,963 2,963
Contracts Receivable, gross 54,413 35,386 21,290 14,227 10,526 8,649 7,412 6,534
Allowance for Doubtful Accounts (17,495) (13,806) (5,085) (5,136) (3,867) (3,068) (2,564) (2,247)
Other Allowances (4,333) (2,882) (1,855) (1,272) (886) (697) (612) (561)
-------- -------- -------- ------- ------- ------- ------- -------
Contracts Receivable, net 32,585 18,698 13,350 7,819 5,773 4,884 4,236 3,736
Campground Real Estate 15,977 15,331 13,362 12,994 12,805 12,541 12,198 12,198
Resort Real Estate 2,853 1,352 1,352 962 962 962 962 962
Buildings and Equipment, gross 36,148 40,441 38,746 40,728 41,915 44,000 46,141 48,941
Accumulated Depreciation (5,890) (8,402) (10,509) (13,863) (16,672) (19,510) (22,343) (25,269)
-------- -------- -------- ------- ------- ------- ------- -------
Buildings and Equipment, net 30,258 32,039 28,237 26,865 25,243 24,490 23,798 23,672
Land Held for Sale 6,854 8,341 6,820 4,736 3,229 1,844 1,764 1,764
Dues and Accounts Receivable 3,546 3,017 1,268 2,212 2,223 2,234 2,292 2,292
Inventories 1,401 1,281 1,156 1,174 1,223 1,278 1,336 1,396
Prepaid Expenses 526 651 1,567 620 618 620 617 615
Consent Fee, net 1,512 1,089 647 - - - - -
Other Assets 1,368 1,862 3,525 4,403 5,180 5,734 6,298 6,783
-------- -------- -------- ------- ------- ------- ------- -------
Total Assets $148,164 $135,886 $107,773 $69,873 $65,344 $62,675 $61,589 $61,506
======== ======== ======== ======= ======= ======= ======= =======
LIABILITIES AMD SHAREHOLDERS' EQUITY [DEFICIT]
LIABILITIES:
Accounts Payable $ 3,215 $ 3,740 $ 1,216 $ 1,924 $ 1,924 $ 1,974 $ 2,024 $ 2,024
Accrued Wages 3,023 4,212 3,389 2,889 2,889 2,889 2,889 2,889
Accrued Liabilities 6,055 3,568 4,738 2,775 2,785 2,798 2,812 2,825
Accrued Interest Payable 6,988 7,008 5,617 - - - - -
Borrowings --
Notes and Mortgages 5,503 4,753 940 504 306 139 - -
Senior Secured Credit Facility 13,309
Subordinated Notes 44,944 49,163 42,505 34,774 27,274
Subordinated Notes -- FAS 15 1,725 1,355 955 609 328
Secured Notes 127,421 127,421 101,454 - - - - -
Discount on Secured Notes (16,567) (11,931) (7,096) - - - - -
-------- -------- -------- ------- ------- ------- ------- -------
Secured Notes, net 110,854 115,490 94,358 - - - - -
Deferred Dues Revenue 18,414 18,622 17,631 17,631 17,631 17,631 17,631 17,631
Other Liabilities 12,024 8,314 7,024 6,525 6,128 5,705 5,420 5,115
-------- -------- -------- ------- ------- ------- ------- -------
Total Liabilities 166,076 165,707 134,913 92,176 82,181 74,596 66,159 58,086
-------- -------- -------- ------- ------- ------- ------- -------
SHAREHOLDERS' EQUITY (DEFICIT):
Removal of Debt - - - - - - - -
Common Stock 37 37 37 56 56 56 56 56
Additional Paid-In Capital 17,549 17,549 17,549 19,381 19,381 19,381 19,381 19,381
Accumulated Earnings (Deficit) (35,498) (47,407) (44,726) (41,740) (36,274) (31,358) (24,007) (16,017)
-------- -------- -------- ------- ------- ------- ------- -------
Total Shareholders' Equity
(Deficit) (17,912) (29,821) (27,140) (22,303) (16,837) (11,921) (4,570) 3,420
-------- -------- -------- ------- ------- ------- ------- -------
Total Liabilities & Shareholders'
Equity (Deficit) $148,164 $135,886 $107,773 $69,873 $65,344 $62,675 $61,589 $61,506
======== ======== ======== ======= ======= ======= ======= =======
</TABLE>
The accompanying assumptions are an integral part
of these business plan balance sheets.
<PAGE>
USTrails Inc. and Subsidiaries
BUSINESS PLAN CASH FLOWS AVAILABLE
Historical through June 30, 1995, Projections Thereafter
(Revised to Reflect June 21, 1996 Modification of Restructuring Transaction)
(amounts in thousands)
<TABLE>
<CAPTION>
Actual June 30, Business Plan for the Years Ending June 30,
--------------------- -------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 20001
-------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Income (loss) from operations $ 1,375 $ (3,682) $ 4,867 $ 6,428 $ 7,731 $ 8,493 $10,528 $11,566
Depreciation 2,457 2,591 2,702 2,635 2,658 2,789 2,808 2,901
Capital expenditures --
campground operations (1,806) (4,881) (2,115) (2,300) (2,300) (2,800) (2,800) (2,800)
-------- ------- ------- ------- ------- ------- ------- -------
Net Cash Provided By (Used In)
Operations 2,026 (5,972) 5,454 6,763 8,088 8,482 10,536 11,667
Principal collections on
contracts receivable 28,256 16,678 11,521 6,052 3,990 3,503 3,414 3,422
Processing fees 1,501 1,044 825 750 688 641 400 400
Interest income on
contracts receivable 8,741 5,732 3,611 2,273 1,453 1,106 803 754
-------- ------- ------- ------- ------- ------- ------- -------
36,498 23,454 15,957 9,075 6,131 5,250 4,717 4,576
Proceeds from asset sales 10,294 1,130 7,048 7,420 4,964 3,238 2,241 -
Principal payments on notes
and mortgages (2,280) (750) (1,178) (436) (198) (167) (139) -
Interest payments on notes
and mortgages (822) (590) (311) (122) (70) (45) (35) -
Interest income on
cash balances 99 99 99 99 99
Other, net (5,933) (1,452) (6,033) (2,743) (2,607) (3,266) (3,414) (3,491)
-------- ------- ------- ------- ------- ------- ------- -------
Cash Available Before Debt
and Taxes 39,783 15,820 20,937 20,056 16,408 13,591 14,005 12,951
-------- ------- ------- ------- ------- ------- ------- -------
Repurchases of Secured Notes (8,000) - (5,233) - - - - -
Payment of consent fees to
Secured Noteholder (1,610) - - - - - - -
Mandatory redemption of
Secured Notes - - (18,599) - - - - -
Redemption--Secured Notes - - - (49,812) - - - -
Proceeds from Senior
Secured Credit Facility - - - 30,000 - - - -
Payment of Senior Secured
Credit Facility - - - (16,691) (13,309) - - -
Payment of Subordinated Notes - - - - (1,336) (12,734) (12,985) (7,500)
Interest paid on Secured Notes (16,976) (15,283) (14,175) (6,088) - - - -
Interest paid on Senior
Secured Notes - - - (2,884) (1,145) (108) (108) (108)
Interest paid on Subordinated
Notess - - - - - - - (4,298)
Fees and expenses on
restructuring - - - (2,500) - - - -
State income taxess (482) (618) (749) (912) (945)
Trails acquisition (7,497) - - - - - - -
-------- ------- ------- ------- ------- ------- ------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 5,700 537 (17,070) (28,401) - - - -
CASH AND CASH EQUIVALENTS:
Beginning of year 44,359 50,059 50,596 33,526 5,125 5,125 5,125 5,125
-------- ------- ------- ------- ------- ------- ------- -------
End of year $ 50,059 $50,596 $33,526 $ 5,125 $ 5,125 $ 5,125 $ 5,125 $ 5,125
======== ======= ======= ======= ======= ======= ======= =======
</TABLE>
The accompanying assumptions are an integral part
of these business plan cash flows.
<PAGE>
USTrails Inc. and Subsidiaries
BUSINESS PLAN OPERATING STATEMENTS
Historical through June 30, 1995, Business Plan Thereafter
(Revised to Reflect June 21, 1996 Modification of Restructuring Transaction)
(Amounts in thousands)
<TABLE>
<CAPTION>
Actual June 30, Business Plan for the Years Ending June 30,
--------------------- -------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 20001
-------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAMPGROUND OPERATIONS
Membership dues $ 43,200 $ 41,175 $ 39,548 $ 37,139 $ 36,854 $ 37,098 $ 37,954 $ 39,146
Ancillary revenues 13,529 15,411 14,650 16,348 17,015 17,816 18,711 19,488
Cost of Ancillary Revenues (7,643) (8,148) (7,409) (8,463) (8,895) (9,403) (10,008) (10,392)
-------- -------- -------- -------- -------- -------- -------- --------
5,886 7,263 7,241 7,885 8,120 8,413 8,703 9,904
Operating expenses (37,880) (40,153) (34,890) (32,954) (33,559) (34,269) (35,024) (36,069)
-------- -------- -------- -------- -------- -------- -------- --------
Contribution Before Sales
& Marketing 11,206 8,276 11,899 12,070 11,415 11,242 11,633 12,171
-------- -------- -------- -------- -------- -------- -------- --------
Sales 1,457 1,780 2,624 4,805 6,907 9,387 12,263 13,561
Selling expenses (1,583) (1,885) (2,877) (3,078) (4,021) (5,281) (6,629) (7,242)
Marketing expenses (1,282) (3,639) (1,301) (2,288) (2,757) (3,532) (3,986) (4,195)
-------- -------- -------- -------- -------- -------- -------- --------
Net Sales (1,408) (3,844) (1,554) (561) 129 574 1,648 2,124
Cottage membership operations - - - 406 1,215 1,737 2,034 2,271
-------- -------- -------- -------- -------- -------- -------- --------
CONTRIBUTION FROM CAMPGROUND
OPERATIONS 9,798 4,431 10,345 11,915 12,759 13,553 15,315 16,566
-------- -------- -------- -------- -------- -------- -------- --------
Full service resorts, net (142) 465 (101) 423 450 579 596
RPI, net 2,231 2,118 2,273 2,367 2,681 2,743 2,922 3,001
General and administrative
expenses (14,568) (14,181) (12,212) (11,365) (11,155) (10,980) (10,932) (11,214)
Other revenue 4,056 3,485 4,461 3,612 3,023 2,727 2,644 2,617
-------- -------- -------- -------- -------- -------- -------- --------
OPERATING INCOME (LOSS) 1,375 (3,682) 4,867 6,428 7,731 8,493 10,528 11,566
-------- -------- -------- -------- -------- -------- -------- --------
Interest income 12,202 9,935 6,797 3,606 2,598 2,127 1,628 1,494
Interest expense (21,446) (20,960) (17,682) (8,092) (6,400) (5,829) (6,052) (4,125)
-------- -------- -------- -------- -------- -------- -------- --------
Net interest income
(expense) (9,244) (11,025) (10,885) (4,486) (3,802) (3,702) (3,424) (2,631)
Gain on asset sales 5,544 658 4,036 4,024 2,155 874 1,159 -
Restructuring charges (3,313) (637) (800) (2,500) - - - -
Extraordinary gain on debt
transactions 671 - 1,390 - - - - -
Enterprise bonus - - (795) - - - - -
Insurance reserves released - - 588 - - - - -
Adjust receivable reserves - - 4,146 - - - - -
State income taxes - - (72) (482) (618) (749) (912) (945)
All other (1,079) 2,763 231 2 - - - -
-------- -------- -------- -------- -------- -------- -------- --------
NET INCOME (LOSS) $ (6,048) $(11,823) $ 2,696 $ 2,986 $ 5,466 $ 4,916 $ 7,351 $ 7,990
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
The accompanying assumptions are an integral part of these business plan
operating statements.
<PAGE>
================================================================================
A Secured Noteholder desiring to tender some or all of its Secured Notes
pursuant to this Offer should complete the related Letter of Transmittal in
accordance with the instructions therein and in the Offer to Purchase and then
deliver it along with the certificates for such Secured Notes and any other
required documents to the Depositary. Alternatively a financial institution may
be able to tender its Secured Notes pursuant to the book-entry transfer
procedures set forth in the Offer to Purchase. If a Secured Noteholder cannot
deliver a Letter of Transmittal and its Secured Notes to the Depositary on or
before the Expiration Date such Secured Noteholder may tender its Secured Notes
through the guaranteed delivery procedures set forth in the Offer to Purchase.
The Company has not authorized the Depositary, the Information Agent or any
other person to give any information with respect to this Offer other than the
information set forth herein and in the Offer to Purchase. Moreover under no
circumstances shall the information set forth herein be considered correct or
unchanged as of any date subsequent to the date hereof. This Offer does not
constitute an offer to purchase Secured Notes in any jurisdiction where such an
offer would be illegal or otherwise prohibited.
_________
SUMMARY TABLE OF CONTENTS
PAGE
----
Introduction.............................................................. 1
Background to this Offer.................................................. 3
Special Considerations.................................................... 4
Terms of the Restructuring Transaction.................................... 5
Source and Amount of Funds................................................ 7
Interests of Management and Others........................................ 7
Historical and Pro Forma Capitalization................................... 8
Selected and Pro Forma Financial Data..................................... 9
Appendix I: Defined Terms................................................. I-1
Exhibit A: Opinion of Rauscher Pierce Refsnes, Inc........................ A-1
Exhibit B: Revised Business Plan......................................... B-1
================================================================================
USTRAILS INC.
SUPPLEMENT TO
OFFER TO PURCHASE
DEPOSITARY:
FLEET NATIONAL BANK,
AS DEPOSITARY
CORPORATE TRUST OPERATIONS
777 MAIN STREET, CTMO 0224
HARTFORD, CT 06115
TELEPHONE NO. (860) 986-1271
FACSIMILE NO. (860) 986-7908
BY HAND DELIVERY IN NEW YORK:
SHAWMUT TRUST COMPANY
C/O FIRST CHICAGO TRUST
COMPANY OF NEW YORK
14 WALL STREET, 8TH FLOOR, WINDOW 2
NEW YORK, NY 10015
INFORMATION AGENT:
HILL & KNOWLTON, INC.
466 LEXINGTON AVENUE
NEW YORK, NY 10017
TELEPHONE NO. (212) 885-0555
OR (800) 755-3002
SUPPLEMENT TO OFFER TO PURCHASE
JUNE 21, 1996
=============================================================================
